For first time in a month, gold trades at discount in India amid falling demand

India’s gold market has turned cautious this week as price fluctuations have discouraged buyers, prompting the return of trading discounts after almost a month of premiums. Meanwhile, strong festive demand in China has lent support to regional physical markets ahead of the Lunar New Year celebrations.

Price fluctuations impact jewellers

In India, bullion dealers are offering discounts of up to twelve dollars per ounce from official domestic prices, which include import and sales levies totalling nine percent. This marks a significant change from last week’s premium of up to seventy dollars. Jewellers say customers remain reluctant to purchase even as making charges are reduced. According to traders in Hyderabad, many retail buyers find current price levels unappealing for fresh purchases.

Gold was priced around one lakh fifty four thousand rupees per ten grams on Friday, after touching a low of nearly one lakh thirty four thousand rupees the previous week. The fall in price signals volatile trading sentiment, which has further discouraged new buying from both jewellers and investors.

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Import expectations influence buying behaviour

Dealers have largely refrained from fresh purchases from banks as they anticipate a new round of gold imports under concessional duty. Market participants expect the government to allow approximately eighty metric tons of imports from the United Arab Emirates under the Comprehensive Economic Partnership Agreement. The arrangement offers lower import duties, prompting many to delay orders in the hope of securing cheaper supplies later this month.

Festive demand strengthens in China

China has witnessed a different trend, where gold is trading close to global levels. Prices moved between an eight-dollar discount and a ten-dollar premium per ounce in the mainland market this week. The upcoming nine-day Lunar New Year holiday, starting on the fifteenth of February, has fuelled seasonal buying. Analysts note that although high prices have subdued enthusiasm, overall demand remains positive.

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Regional variations across Asia

Hong Kong recorded premiums of up to one dollar eighty cents, while in Japan gold traded between a six-dollar discount and a one-dollar premium. Singapore’s market remained relatively stable, with prices ranging from a fifty-cent discount to premiums of three dollars fifty cents. Overall, Asia’s gold trade continues to reflect the contrasting pull of local demand and global price uncertainty.