India's Gold Demand Subdued as Prices Reach Record Highs

Gold demand in India has remained subdued in recent days, as near record-high prices discouraged buyers and led dealers to widen discounts in an effort to attract customers. Domestic gold prices in India hit an all-time peak of 101,078 rupees per 10 grams last month, and are currently trading around 97,500 rupees per 10 grams.

The high prices have taken a toll on India's gold market, with jewellery stores across the country reporting fewer customers. "People aren't ready to buy just yet... They're holding off, hoping prices will come down," said a Kolkata-based jeweller.

The slump in demand has also impacted India's gold imports, which fell 40% in June 2023 compared to a year earlier, reaching their lowest level in more than two years. The limited supply due to the sharp decline in imports has prevented discounts from rising even further.

The trend of weak gold demand is not limited to India, as other major Asian hubs have also seen curtailed activity due to the elevated rates. In China, the world's top gold consumer, dealers are currently quoting discounts of $5 per ounce to $10 premium on spot rates, down from the premiums of $10-$25 charged last week. Industry experts suggest that physical buying interest in China may pick up from October 2023 onwards.