Gold Demand Weakens in India While Chinese Premiums Slip on Oversupply
Physical gold demand across Asia moderated this week, with Indian dealers cutting prices due to sluggish demand and Chinese premiums narrowing amid signs of oversupply.
India: Monsoon and End of Wedding Season Damp Demand
In India, traditionally one of the world’s largest consumers of gold, demand slowed significantly this week. Bullion dealers were offering discounts of up to $31 per ounce on official domestic prices, inclusive of import (6%) and sales taxes (3%). That marks a reduction from last week’s steeper $49 discount, indicating only a marginal improvement in off-take.
“The wedding season is wrapping up, and the monsoon has kicked in,” said a bullion dealer in Mumbai. “Jewellers are anticipating a seasonal dip, so they’re holding off on replenishing their stock.”
Domestic prices hovered around ₹94,900 per 10 grams, up from this month’s low of ₹90,890, discouraging casual buyers and retail investors alike.
China: Oversupply Pressures Market Premiums
In China, bullion traded at par to a $15 premium per ounce over global spot prices, down from $16 to $30 last week, according to market participants.
This decline reflects a temporary glut in the domestic market. “Drawdowns from the Shanghai Gold Exchange (SGE) have eased to yearly lows,” said Ross Norman, an independent metals analyst. Meanwhile, April gold imports via Hong Kong tripled, reaching the highest level in over a year, based on official trade data.
“While bullish sentiment still dominates trading on the Shanghai Futures Exchange (SHFE), trading volumes have thinned, and overstocking is evident,” said Hugo Pascal of InProved.
Regional Market Summary
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Hong Kong: Gold traded at a premium of $0.30 to $1.30.
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Singapore: Prices ranged from par to $2.50 premium.
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Japan: Gold sold at par to a $0.50 premium.
Market Outlook: Watching US Data and Seasonal Trends
The cooling in physical demand across both India and China comes at a time when global investors are closely watching the U.S. inflation data for signals on the Federal Reserve’s rate trajectory. The strengthening dollar has already pushed gold lower on global markets, making physical buying less attractive in non-dollar economies.
Going forward, demand in India is expected to remain soft until the festive season resumes post-monsoon, while Chinese markets may see lower imports if domestic stockpiles remain high.
