Gold demand in India remained subdued this week, as volatile prices prompted potential buyers to hold off on purchases. Meanwhile, higher gold prices in China could potentially dampen the impact of seasonal demand in the region.
A jeweller based in Chennai noted that after significant price fluctuations over the past two weeks, buyers in India are taking a cautious, wait-and-see approach, hoping for further price declines. Domestic gold prices in India dropped to 75,459 rupees ($887.28) per 10 grams earlier this week, down from 79,120 rupees last week.
Indian dealers offered a discount of up to $8 per ounce this week over official domestic prices, which include 6% import duties and a 3% sales tax. This marked a slight reduction from last week’s discount of up to $9.
“Jewellers have been staying on the sidelines, waiting for a potential interest rate cut by the Federal Reserve,” explained a Mumbai-based dealer with a private bullion importing bank. “However, they were caught off guard when the rupee plunged to a record low.”
India’s gold imports are expected to sharply decline in December, as higher gold prices have led many consumers to opt for lightweight and lower-carat jewellery options. At the same time, gold exports from Switzerland saw an uptick in November, driven by increased shipments to India, as well as a modest recovery in exports to China and Hong Kong.
Across other Asian markets, gold demand remains weak due to high prices. In China, the world’s largest consumer of gold, dealers offered discounts of around $5 per ounce on the international price. Despite this, analysts believe demand could rise in January ahead of the Chinese New Year, although buyers are expected to focus on lighter, lower-value pieces.
In Japan, gold premiums varied between $1.5 and discounts of up to $4.5 per ounce. Meanwhile, in Hong Kong, gold was sold at a premium of $2 per ounce, according to local traders.
As global gold prices remain volatile, the outlook for gold demand in Asia—particularly in India and China—remains uncertain in the short term.
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