Gold Market Update: Premiums Surge in China, Discounts Soar in India

This week, the gold market has shown contrasting trends in two of Asia’s largest economies. China is experiencing a significant rise in premiums, while India faces a steep increase in discounts. As global gold prices fluctuate, these shifts highlight changing consumer behavior in response to high costs.

Indian Gold Discounts Reach a Nine-Year High

In India, the gold market is grappling with unprecedented discounts, which have now soared to as much as $80 per ounce below official domestic prices. This marks the widest margin since July 2016, reflecting the impact of soaring gold prices on consumer demand. Last week, discounts were at $74 per ounce, indicating a notable decline in buying activity.

• Jewelry sales decline: Surendra Mehta, secretary of the India Bullion and Jewellers Association (IBJA), noted that "as prices continue to rise, shoppers are hesitant to buy, leaving jewelers across the nation feeling the effects of this slowdown."
• Spot gold prices recently crossed the $3,500 per ounce threshold, currently trading around $3,333.73 as of Friday morning.

Impact of the Upcoming Akshaya Tritiya Festival

With the Akshaya Tritiya festival—a major gold buying occasion—looming next week, local jewellers are facing challenges. A dealer from a private bullion importing bank in Mumbai remarked that there has been a notable drop in advance orders, indicating that consumers are holding back on purchases.

• Record high prices: Earlier this week, gold prices in India peaked at 99,358 rupees (approximately $1,167) per 10 grams, further complicating the market landscape.

China’s Gold Premiums Surge

Contrastingly, in China, gold premiums have sharply increased, reaching between $44 to $50 per ounce over global benchmark prices. This surge is the highest seen since February 2024 and is a significant jump from the previous week’s range of $15 to $21.

• Increased demand: Joseph Stefans, Group Head of Trading at MKS PAMP, stated, "The premiums in China are extremely healthy, which indicates strong demand. As a result, gold is being transported into the region from various global sources."

Regional Market Insights

Further insights from the broader Asian market reveal:

• In Hong Kong, gold was sold at par with a slight premium of $2.
• In Singapore, the trading was at par to a premium of up to $2.50 per ounce.
• In Japan, bullion was available at a slight discount of $0.25 to a premium of $1.00.

As the gold market continues to evolve, these disparities in pricing and consumer behavior across India and China illustrate the dynamic nature of global bullion demand. While Indian buyers remain cautious, Chinese consumers are actively engaging in the market, highlighting the complex interplay of regional economic factors in the gold sector.