Gold demand in India softened again on Friday after a brief recovery earlier in the week, as a rebound in prices from three-month lows prompted buyers to step back and return to a more cautious stance.
At the same time, buying interest in China improved modestly, with dealers reporting a slight pickup in inquiries after prices stabilized around the $4,000-per-ounce level.
In India, local gold prices rose to as high as 148,046 rupees ($1,553) per 10 grams after touching 140,450 rupees on Tuesday, their lowest level since March 27. The sharp recovery reduced the urgency among consumers who had taken advantage of the earlier decline.
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“Many buyers were waiting for a price correction. Once prices corrected, they began making small purchases at the beginning of the week,” a Kolkata-based jeweler said.
Dealers quoted premiums of up to $5 an ounce and discounts of up to $7 over official domestic prices this week, including India’s 15% import duty and 3% sales tax. That compares with premiums of up to $6 last week.
“Jewelers were purchasing, but volatile prices made them cautious. The lean demand season has now started, as there are no major festivals soon,” said a Mumbai-based bullion dealer with a private bank.
The seasonal slowdown is significant for the Indian market, which is heavily influenced by wedding demand and religious festivals. With major festivals several months away, jewelers are expected to focus largely on inventory management rather than aggressive stocking.
Global Prices Regain Footing
International spot gold was on track for its first weekly gain in five weeks and traded above $4,100 an ounce. The recovery followed weaker-than-expected U.S. payrolls data, which eased expectations that the Federal Reserve would need to keep interest rates elevated for longer.
Higher interest rates typically weigh on gold because the metal offers no yield. Recent economic data have encouraged some investors to reassess the outlook for additional monetary tightening, helping bullion recover from its recent slide.
Gold had fallen sharply from a record high of $5,594.82 an ounce reached in late January, but the latest rebound suggests investors continue to view the metal as an important hedge against economic and geopolitical uncertainty.
China Shows Tentative Improvement
In China, gold traded at par to discounts of $2 an ounce relative to the international benchmark, an improvement from last week’s wider discounts of $3 to $7.
“$4,000 looks like a very good support at this moment, and I think the market will stay here for quite a while. However, there is still a lot of uncertainty, which is why people are hesitating to buy too much at this moment,” said Peter Fung, head of dealing at Wing Fung Precious Metals.
“If prices fall back below $4,000, we could see some further buying interest on the dip.”
Chinese demand has been influenced by a combination of domestic economic concerns, currency movements and investor caution after gold’s sharp rally earlier in the year. The narrowing discounts suggest physical demand is gradually recovering, although buyers remain price-sensitive.
Across the rest of Asia, physical demand remained relatively subdued.
In Hong Kong, gold traded between a discount of 50 cents and a premium of $1.70 an ounce over global benchmark prices, reflecting balanced local demand and supply conditions.
In Japan, bullion changed hands at a discount of about 50 cents an ounce, while in Singapore, dealers quoted prices ranging from a discount of $1 to a premium of $1.60 an ounce.
Regional market snapshot
| Market | Premium/Discount vs spot |
|---|---|
| India | Premium up to $5; discount up to $7 |
| China | Par to $2 discount |
| Hong Kong | $0.50 discount to $1.70 premium |
| Japan | $0.50 discount |
| Singapore | $1 discount to $1.60 premium |
What The Market Is Watching
Traders are now focused on whether gold can hold above the psychologically important $4,000 level. A sustained hold could encourage additional physical buying in Asia, particularly in China and India, where consumers have shown strong interest whenever prices retreat sharply.
However, the price recovery may also limit immediate demand. Indian buyers are entering a seasonally weaker period, while Chinese investors remain cautious amid uncertainty over global growth, U.S. monetary policy and geopolitical developments in the Middle East.
For now, the market appears to be entering a consolidation phase, with physical demand improving modestly on dips but remaining sensitive to further price swings.