Gold’s recent surge to all-time highs has overshadowed India’s import duty cut, dampening domestic demand as local prices hover near record levels. India, the world’s second-largest gold consumer, saw a slight uptick in demand earlier this week, but it quickly lost momentum as prices rebounded. Bullion dealers in India offered discounts of up to $17 per ounce, reflecting the low demand amidst soaring prices. The global rally has nearly negated the benefit of the import duty cut, making gold less appealing to Indian retail buyers.
Similarly, concerns about weak demand in China, the world’s largest gold consumer, have emerged. For the first time since January 2021, Switzerland, a key global refining and transit hub, reported zero gold exports to China in August. Chinese dealers, facing weak demand, have increased discounts to as much as $14 per ounce over global spot prices. August withdrawals from the Shanghai Gold Exchange were down 37% year-over-year, a stark contrast to the typical seasonal surge ahead of gold fairs and the National Day holiday.
Physical investment demand for gold remains strong in China, with bars and coins still attracting buyers, but jewelry demand has plummeted. The China Gold Council reported a 27% decline in jewelry purchases in the first half of 2024, while overall demand only fell by 6%. Experts attribute the decline to weaker income expectations and high prices, leaving many consumers in a “wait-and-see” mode, hoping for price reductions.
Japan’s gold market is also seeing more sellers than buyers, with traders offering discounts. In contrast, Singapore stands as a regional outlier, with some retail customers willing to pay premiums of up to $2.20 per ounce, anticipating further price increases.
As gold reached a historic high of $2,620 per ounce on Friday, the outlook for demand across Asia remains uncertain. Elevated prices and economic concerns are keeping many buyers on the sidelines, indicating that the rally may continue to challenge demand in key markets like India and China.
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