In India, the world's No 2 gold consumer, gold premiums dropped due to subdued demand after the government scrapped high-value notes.
Cash crunch was forcing retail consumers to trim purchases, while jewellers were waiting for prices to fall next month, traders said.
Dealers charged a premium of up to $3 an ounce on Friday over official domestic prices that include a 10% import tax. That compared with up to $12 an ounce last week, the highest in two years.
"Retail demand has fallen, especially in rural areas, due to the cash crunch," said Daman Prakash Rathod, director at MNC Bullion, a wholesaler in India's southern city of Chennai.
"People are expecting some government measures to dampen gold demand."
The government may impose curbs on domestic holdings of gold as Prime Minister Narendra Modi intensifies a fight against "black money", news agency NewsRise reported.
"Jewellers are reluctant in making purchases. They are seeking clarity on rules before building inventory," said a Mumbai-based dealer with a private bank.
Gold premiums in top consumer China jumped to the highest in nearly three years this week on worries over a supply shortage that traders said were due to Beijing's efforts to restrict import licenses.
China's net gold imports via the main conduit Hong Kong fell 15% from a year earlier to 61.075 tonnes in October.
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