High Gold Prices Weigh on India Demand as China Premiums Rise

Physical gold demand in India remained subdued this week as domestic prices stayed close to record highs, discouraging jewellery buyers and retail investors. Elevated prices continue to weigh on purchasing activity, with many consumers delaying their buying decisions.

Indian dealers were offering premiums of up to $6 per ounce over official domestic prices, including import and sales taxes. This marks a decline from last week’s premiums of up to $15 per ounce, reflecting softer demand.

“Jewellery buying is being badly affected by rising prices. Retail buyers are postponing purchases,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Market participants noted thin footfall at jewellery stores, with only limited demand for gold coins and bars. A Mumbai-based bullion dealer said overall buying activity remained marginal despite the festive period.

China Sees Renewed Retail Interest

In contrast, gold premiums in China climbed for a second consecutive week, signaling a pickup in physical demand after the holiday period. Bullion in China traded at premiums of up to $21 per ounce over international spot prices, sharply higher than last week’s $3 premium.

“Physical gold demand in Asia has shown renewed strength this week, particularly in China and Hong Kong,” said Bernard Sin, regional director for Greater China at MKS PAMP. He added that tighter supply conditions and returning retail interest supported higher premiums.

Outlook for Jewellery Demand

Despite the recent recovery in parts of Asia, HSBC expects jewellery demand to recover only gradually in 2026 and 2027, citing persistently high prices and cautious consumer spending.

With gold prices still elevated globally, analysts expect physical demand to remain uneven across major consuming regions in the near term.