Demand for physical gold slowed in India this week as rising prices and Middle East tensions discouraged buyers. Retail purchases dropped, while gold premiums in China remained steady.
Domestic gold prices in India traded around 160,000 rupees ($1,746) per 10 grams on Friday. Earlier this week, prices peaked at 169,880 rupees. Volatile rates and heavy import levies made buying gold difficult for many consumers.
“Retail buyers are struggling to digest the hefty price hike,” said Varghese Alukka, managing director of Jos Alukkas in Kerala. “At these levels, buying gold is becoming unaffordable.”
Airspace closures in the Middle East sharply reduced gold supplies to India, narrowing discounts offered by bullion dealers. Discounts this week fell to $28 per ounce, down from $65 last week, a 10-month high. Gold imports from the United Arab Emirates have nearly halted due to flight cancellations, further tightening supply.
Despite price volatility, wedding season demand in India remained weak. Weddings are traditionally a major driver of gold purchases, but buyers are postponing purchases amid unstable prices.
Meanwhile, physical gold demand in China held firm. Premiums in Chinese markets ranged from $13 to $15 an ounce, slightly higher than last week’s $12-$13. “Physical gold demand is still very steady, even with spot prices above $5,000,” said Peter Fung of Wing Fung Precious Metals. Many investors continue buying gold for long-term investment.
Global gold prices were volatile this week, falling about 3% on inflation concerns and fading interest rate-cut expectations. Spot gold was priced around $5,135 per ounce on Friday, after jumping over 8% in February, marking seven consecutive months of gains.
In other Asian markets, gold traded at small premiums. Hong Kong saw prices at par or $2 above, Japan at par to $1 premium, and Singapore gold traded at around $2.25, slightly lower than last week’s $3.50–$4.80.
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Analysts say that while Indian demand is subdued due to high prices, China’s steady interest shows gold remains a popular safe-haven investment amid global uncertainty.
