Gold demand in India experienced a notable increase this week due to festival purchases, although overall volumes lagged behind typical levels because of record-high prices. Here are the key highlights:
Retail Buying Surge: Retail gold purchases surged as consumers sought to buy during the auspicious festival period. However, many buyers opted for token purchases due to the elevated prices.
Record Prices: Gold prices in India reached a record high of 79,775 rupees per 10 grams earlier this week, reflecting a nearly 33% increase since last year’s Diwali celebrations.
Shift in Buying Preferences: There was a noticeable increase in the share of coins and bars in total sales, as buyers were reluctant to pay higher making charges for traditional jewellery.
Market Premiums and Discounts: Indian dealers initially charged a premium of up to $1 an ounce over official domestic prices during Dhanteras, which includes various levies. However, later in the week, discounts of up to $5 were offered, compared to last week’s $4 discount.
Sales Volume Context: Although sales volumes were lower than last year, the value of sales remained strong due to the price increases. A Mumbai-based bullion dealer noted that even modest volume drops were promising in terms of value.
Festive Boost: The Diwali and Dhanteras festivals, celebrated this week, are traditionally seen as auspicious times for gold purchases. A managing director at GoldSilver Central remarked on the positive sales during this festive period after a prolonged quiet spell.
Regional Trends: In Singapore, gold was sold at discounts ranging from $0.80 to premiums of $2.20. Meanwhile, demand for physical silver and platinum is reportedly rising in Singapore.
China’s Market Challenges: In China, dealers offered discounts of $11-$14, with gold consumption in the first three quarters of 2024 down 11.18% due to high prices affecting jewellery demand. Ongoing economic challenges continue to influence consumer behavior, despite government stimulus efforts.
Japan’s Buying Activity: In Japan, traders quoted prices at a discount of $0.25 to a premium of $0.50, with some purchases and limited selling as consumers focused on asset protection.