India gold discounts widen as prices hit record high, China demand muted

Gold discounts in India widened this week as demand fell despite the wedding season after prices scaled record highs, while Chinese demand remained muted amid volatility and high spot prices.

Indian dealers were offering a discount of up to $34 per ounce to official domestic prices this week, inclusive of 6 per cent import and 3 per cent sales levies, wider than last week's discount of up to $22.

Jewellers haven't been buying (gold) as store footfalls have dropped sharply due to the price rally, a Mumbai-based bullion dealer with a private bank said.

Domestic gold prices hit a record high of ₹132,776 per 10 grams on Friday.

"Rising prices are really killing the wedding-season vibe. Buyers just aren't willing to shop at these highs," a Mumbai-based jeweller said.

Weddings are a key driver of gold demand in India, with bullion widely gifted by family and friends.

In top consumer China, bullion traded anywhere from discounts of $20 an ounce to premiums of $10, compared with the global benchmark spot price.

"Physical demand remains soft and volatile (in China), as gold prices reach record highs and discounts deepen. The recent VAT (value-added tax) adjustment has increased costs for jewellers and further weighed on retail demand," said Bernard Sin, regional director- Greater China, MKS PAMP.

On November 1, Beijing cut a VAT exemption for certain gold purchased through the Shanghai Gold and Shanghai Futures exchanges.

Gold prices held near a seven-week high on Friday, supported by expectations of more interest rate cuts next year after the U.S. Federal Reserve pushed back against hawkish market bets. [GOL/]

In Singapore, gold was sold at premiums of $1.5 to $3.50 this week, while in Hong Kong it traded from a $0.5 discount to a $2.5 premium.

In Japan, bullion traded at discounts of up to $5.5 to a $1 premium over spot prices amid slow demand, with retail shops holding smaller quantities and investors booking profits ahead of the New Year holidays.