Gold discounts in India widen to 10-month highs, China demand picks up

Gold discounts in India widened to their deepest in 10 months as a rebound in prices curbed demand, while China demand picked up as the bullion's safe-haven appeal shined through via ‌rising premiums after ⁠markets ⁠returned from the Lunar New Year holiday.

Indian bullion dealers offered a discount of up to $65 per ounce over official domestic gold prices this week - inclusive of 6% import and 3% sales levies, up from last week's discount of up to $18.

"Retail buyers just aren't ready to buy at these prices. For a lot of them, the current levels are simply too expensive to afford," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.


Domestic gold prices were ⁠trading around 160,000 rupees ‌per 10 grams on Friday, after falling to as low as 133,687 rupees earlier this month.

Jewellery demand has fallen sharply and is failing to ⁠draw support even from the ongoing wedding season, said a Mumbai-based bullion dealer with a private bank.

Weddings are a major driver of gold purchases in India, with jewellery being a common gift from families and guests.

China markets came back from the Lunar New Year holiday on Tuesday with higher demand. Gold traded at premiums of $12-$13 an ounce above the global benchmark spot price this week, up from last week's discount of $8 to premiums of up to $10.

"After the Chinese market returned this Tuesday, ‌the premiums were still very steady (on the) open, a few days later and now the physical demand has picked up significantly," said Peter Fung, head of dealing at Wing Fung Precious Metals.

"People are ⁠still going (to gold) for long-term investment and want to buy it as a safe-haven asset."

Spot gold was set for its seventh straight month of gains, rising more than 6% in February, as U.S. tariff uncertainty and mounting U.S.-Iran tensions boosted its safe-haven appeal.

In Hong Kong, physical gold traded at par to premiums of $1.70, while in Japan , gold was sold at a discount of $10 to premiums of up to $1.

In Singapore , gold was traded at premiums of $3.50 to $4.80, up significantly from a $0.50 discount to a $2.20 premium last week.