India Gold Demand Weakens as Buyers Await Price Correction
Indian gold demand remains subdued this week as retail buyers delay purchases, expecting further price declines. China premiums held steady despite strong investment interest.
Gold demand in India stayed muted this week. Retail buyers held back purchases in anticipation of lower prices. Domestic gold prices traded at 153,000 rupees per 10 grams on Friday. This followed a drop to 149,771 rupees earlier in the week. The metal reached a six-week low on Wednesday. This occurred after the US Federal Reserve raised interest rates for the first time in over three years.
Jewelry demand in India is very weak. Retail buyers are not eager to purchase at current levels. They are waiting for a price correction. Dealers quoted discounts of up to 60 dollars per ounce this week. This compares to a discount of up to 75 dollars last week. These discounts include 15% import levies and 3% sales taxes. Jewellers are not buying new gold from wholesalers. They are receiving enough scrap from customers exchanging old jewelry.
Chinese premiums remain stable
Gold in China traded at a premium of 5 dollars per ounce. This was lower than the 8 dollar premium seen last week. Independent analyst Ross Norman noted strong investment demand. He also pointed out weak jewelry demand. These two forces created countervailing pressures on the market. The premium level does not suggest lackluster overall demand. It reflects a balance between investment and retail sectors.
China's central bank increased gold purchases in August. This marked the sixth consecutive month of buying. The bank added the most bullion to its reserves since October 2023. The buying streak has now reached 22 consecutive months. Official data released on Monday confirmed these figures. This trend supports the stability of Chinese gold premiums.
Regional pricing varies across Asia
Singapore gold traded between a 0.50 dollar discount and a 1.60 dollar premium. This range applied during the current week. Hong Kong gold traded between a 0.50 dollar discount and a 1.70 dollar premium. Japan gold traded between a 0.25 dollar discount and a 0.50 dollar premium. These variations reflect local market dynamics and supply conditions. The international spot price remained largely steady for the week.
The festival season is approaching in India. Dussehra will be celebrated in October. Diwali will occur in early November. Buying gold is considered auspicious during these periods. However, jewellers are still not stocking large quantities. Demand remains weak despite the upcoming holidays. This situation mirrors the caution seen in other Asian markets. Market participants await clearer price signals before increasing inventory.
Market outlook remains cautious
Buyers in India are waiting for lower prices. This behavior is consistent with recent market trends. The discount structure has narrowed slightly from last week. Jewellers rely on scrap gold to meet customer needs. China's central bank continues its long-term accumulation strategy. Regional premiums show minor fluctuations but remain stable. The overall market environment suggests caution among both retail and institutional investors. According to GN auto markets/commodities: gold prices, the situation reflects a wait-and-see approach.
