India gold premiums at decadal high; China demand undeterred by price rise

Gold premiums in India rose to a more than decade-high on strong investment demand ahead of a likely duty hike, while premiums in China jumped due ‍to a pickup in investment and jewellery demand ​despite global rates touching a record near $5,600 this week.

Bullion dealers in India charged a premium of up to $121 per ounce this week over official domestic gold prices - inclusive of 6 per cent import and 3 per cent sales levies - the highest since May 2014. Last week, dealers were charging premiums of up to $112.

"Anticipating a duty hike in the budget, investors were paying a premium over record prices to buy gold," said Ashok Jain, proprietor of Mumbai-based gold wholesaler ​Chenaji Narsinghji.

 

Finance Minister Nirmala Sitharaman is set to present the 2026-27 Union Budget on February 1. She had slashed import duties on gold and silver to 6 per cent from 15 per cent in July 2024.

"This week, we witnessed some of the highest volatility in the market. Not only were international prices volatile, but the rupee also fluctuated wildly. This severely affected retail jewellery buying," said a said a Mumbai-based bullion dealer with a private bank.

Domestic gold prices hit a record high of ₹180,779 ($1,967.77) per 10 grams on Thursday.

India's gold demand is likely to fall in 2026 following an 11 per cent drop last year, the World Gold Council (WGC) said on Thursday.

In China, bullion traded at premiums of up to $32 an ounce above the global benchmark spot price this week, up from last week's premium of $8.

With elevated gold prices, customers have been flocking to precious metal traders in Shanghai and Hong Kong, with some betting it could rise even further.

"We can see some physical selling interest from people looking to sell their jewellery at these higher prices. ‌But on the other hand, small investors still want ​to buy because the run for gold and silver looks quite bullish after the break above $5,000," said Peter Fung, head of dealing at Wing Fung Precious Metals.

International spot gold prices were headed for their best month since January 1980 after rallying to a record just shy of $5,600 an ounce earlier this week, with investors seeking safety amid ‍lingering geopolitical and economic uncertainties.  Fung said jewellery demand in China had picked up ahead of the Lunar New Year and fresh demand was still coming in, terming it as a good sign for the yellow ‍metal ‌given jewellery purchases ​represented more long-term investment.

In Hong Kong, gold traded anywhere from a $0.5 discount to ‍premiums of $1.70, while in Japan, bullion was sold at discounts of $6 to a $1 premium, same as last week.

In ‍Singapore, ‍gold was sold between a $0.50 ‌discount to premiums of up to $2.20.