Indian Gold Demand Lags as Buyers Await Price Correction
India's gold market remains sluggish due to buyers holding off on purchases in anticipation of lower prices. Domestic gold prices have been hovering around 153,000 rupees per 10 grams this week, after dipping to 149,771 rupees earlier.
Jewellery demand is extremely weak, with retail buyers unwilling to buy at current price levels and waiting for a correction, according to a Hyderabad-based jeweller. Jewellers are not stocking up on new gold as they're getting enough scrap from customers exchanging old jewellery for new pieces, said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
Despite the approaching festival season in India, where buying gold is considered auspicious during Dussehra in October and Diwali in early November, demand remains weak. In contrast, China's gold market is driven by strong investment demand, with bullion trading at a premium of $5 an ounce to the global benchmark price.
Independent analyst Ross Norman noted that gold in China is still trading just north of the international price, suggesting two strong countervailing forces: robust investment demand and very weak jewellery demand. China's central bank has been increasing its gold purchases for six straight months, adding the most bullion to its reserves since October 2023.