Gold Demand Weakens in India as Prices Surge; China Sees Steady Buying: Reuters
Demand for physical gold in India weakened this week as rising prices and geopolitical uncertainty discouraged buyers, while demand in China remained resilient, according to Reuters reports.
The sharp fluctuations in gold prices come amid escalating tensions in the Middle East, which have disrupted supply chains and pushed bullion prices higher.
India Market Faces Weak Demand
Retail buyers in India have been hesitant to purchase gold as prices surged to record levels. Domestic prices were trading around ₹160,000 per 10 grams, after touching ₹169,880 earlier in the week, according to market data cited by Reuters.
“Retail buyers are struggling to digest the hefty price hike. At these levels, buying gold is becoming unaffordable,” said Varghese Alukka, managing director of jeweller Jos Alukkas, based in Thrissur.
Bullion dealers offered discounts of up to $28 per ounce compared with official domestic prices, narrowing sharply from last week’s $65 discount, which had marked a 10-month high.
Gold imports from the United Arab Emirates, one of India’s key suppliers, have also slowed due to airspace closures and widespread flight cancellations caused by the regional conflict.
The impact is visible even during the wedding season, traditionally a peak period for gold purchases in India.
China Investment Demand Remains Firm
In contrast, physical gold demand in China has remained stable despite high global prices.
Gold traded at premiums of $13–$15 per ounce over international benchmark prices, slightly higher than last week’s premium range.
Peter Fung, head of dealing at Wing Fung Precious Metals, told Reuters that steady premiums indicate strong long-term investment demand among Chinese buyers.
Spot gold prices surged more than 8 percent in February, marking the seventh consecutive month of gains amid global economic and geopolitical uncertainty.
Prices were trading around $5,135 per ounce on Friday, though they have shown volatility due to inflation concerns and shifting expectations around interest rate cuts.
Our Final Thoughts
Gold markets remain highly sensitive to global geopolitical tensions and economic signals. While Indian buyers are stepping back due to rising prices, steady demand in China suggests investors continue to view gold as a reliable long-term safe-haven asset.