The Asian gold market showed contrasting trends this week, with India’s gold discounts climbing to their highest level in seven weeks due to sluggish retail demand, while China experienced stronger physical buying as lower prices encouraged investors to return to the market.

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Domestic gold prices in India were trading near 141,800 Rupees per 10 grams on Friday after briefly touching around 146,000 Rupees per 10 grams earlier in the week. The sharp rebound discouraged jewellery buyers, who are now waiting for a deeper correction before making fresh purchases.

According to market participants, customer footfall at jewellery stores remained limited throughout the week. Retail consumers have largely stayed on the sidelines, expecting gold prices to ease further before making buying decisions.

India Discounts Reach Seven-Week High

With weak demand continuing, bullion dealers increased discounts to attract buyers. Dealers offered discounts of up to 56 dollars per ounce over official domestic prices, including the 15% import duty and 3% sales tax, compared with discounts of 45 dollars per ounce a week earlier.

Bullion traders said overall market sentiment remains cautious, with many jewellers expecting subdued demand in the near term despite the recent decline in prices.

China Witnesses Stronger Physical Gold Buying

Unlike India, China’s physical gold market showed signs of improvement this week. Gold traded at premiums ranging from 3 dollars to 6 dollars per ounce above international spot prices, indicating stronger buying interest compared with the previous week.

Market participants noted that physical demand strengthened as investors viewed the 4,000 dollars per ounce level as an important support zone, encouraging fresh purchases.

Mixed Trends Across Other Asian Markets

Gold trading conditions remained mixed across the region.

• In Hong Kong, physical gold traded between a 0.25 dollar discount and a 1.70 dollar premium.
• In Japan, bullion traded at a 0.25 dollar discount.
• In Singapore, gold was quoted between a 1 dollar discount and a 2 dollar premium, reflecting balanced regional demand.

Global Gold Under Pressure

International spot gold extended its decline after falling more than 2% in the previous session. Rising geopolitical tensions in the Middle East pushed crude oil prices higher, increasing concerns over inflation and raising expectations that the U.S. Federal Reserve could keep interest rates elevated for longer.

Higher interest rate expectations generally reduce the appeal of non-yielding assets such as gold, contributing to recent weakness in bullion prices.

Frequently Asked Questions (FAQs)

1. Why have gold discounts in India increased this week?

Gold discounts widened because jewellery demand remained weak after gold prices rebounded earlier in the week. Dealers increased discounts to encourage buying.

2. Why are Indian consumers delaying gold purchases?

Many retail buyers expect gold prices to correct further before making purchases, leading to lower footfall at jewellery stores.

3. How is China’s gold market different from India’s right now?

China has seen improved physical gold demand, with buyers returning as prices stabilized near key support levels, resulting in higher market premiums.

4. What is putting pressure on global gold prices?

Higher crude oil prices, inflation concerns, stronger expectations of U.S. Federal Reserve rate hikes, and geopolitical tensions have weighed on international gold prices.

5. What does the rise in India’s gold discounts indicate?

Higher discounts generally indicate weaker physical demand, as dealers reduce prices below official levels to attract customers and boost sales.

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