India’s Gold Premiums Hit 10-Year High Amid Festive Demand

MUMBAI, India — Gold demand surged in major Asian markets this week as prices soared to unprecedented levels, with Indian premiums reaching their highest point in over a decade ahead of major festivals.

Spot gold prices exceeded $4,300 per ounce for the first time on Thursday, marking a 7.6% increase this week, fueled by renewed U.S.-China trade tensions and expectations of a potential U.S. rate cut. In India, domestic gold prices peaked at a record high of 131,699 rupees per 10 grams.

Indian dealers are quoting premiums of up to $25 per ounce over official prices, a significant jump from $15 the previous week. Ashok Jain, proprietor of Chenaji Narsinghji, a gold wholesaler based in Mumbai, noted, “The ongoing price rally is boosting investor interest in gold, even as jewellery demand remains weak.”

As the Dhanteras and Diwali festivals approach, jewelers are stocking up on small denomination coins and bars, as these occasions are considered auspicious for gold purchases in India.

Gold smuggling into India has increased due to the high prices and supply shortages, according to government and industry officials. Independent analyst Ross Norman remarked, “Ordinarily, a retail run on investment gold might signal a mature rally, but almost every expectation around gold’s price behavior seems to have been proven wrong.”

In China, the top consumer of gold, bullion was sold at discounts ranging from $20 to $66 an ounce compared to the global benchmark. Precious metals trader Hugo Pascal stated, “The global enthusiasm for precious metals persists, and Chinese demand seems to have returned as well.”

While many sell jewelry to realize profits, others are keen on buying more. Peter Fung, head of dealing at Wing Fung Precious Metals, mentioned, “Some people are selling jewelry as they want to take profit.”

In Hong Kong, gold sold at around par to a $1.30 premium, while in Singapore, prices varied between a discount of $0.50 and a premium of $1.30. Pascal highlighted, “Dealers’ inventories in Singapore continue to be depleted, as demand for the metals remains strong.”

In Japan, gold was priced at a premium of $1 over spot prices, with a Tokyo-based trader commenting, “Investors don’t seem deterred by high prices, they’re just buying.”