India's gold market is experiencing unprecedented volatility as discounts have widened to record levels of up to $207 per ounce over official domestic benchmark prices, inclusive of 15% import and 3% sales levies, according to Reuters. This represents a dramatic increase from just $15 per ounce last week, driven by sharp increases in import duties and weaker retail demand. The policy changes include raising import tariffs on gold and silver to 15% from 6%, while also tightening rules for duty-free imports used by jewellery exporters by capping eligible shipments at 100 kilograms per licence. As a result, domestic gold prices briefly surged to ₹1.64 lakh per 10 grams earlier this week — the highest in more than two months — before settling around ₹1.60 lakh per 10 grams on Friday. The sudden price rise prompted investors to sell, while jewellers and retail buyers stayed on the sidelines, with gold discounts jumping to unusually high levels as demand virtually disappeared and scrap supplies increased.
The situation reflects what dealers describe as a classic demand shock, where prices rise too quickly due to policy and cost changes, causing consumers to step back and leaving excess supply in the system. According to Reuters, the sudden price rise prompted investors to sell, while jewellers and retail buyers stayed on the sidelines. Higher prices have discouraged jewellers and retail buyers, leading to a sharp drop in demand and a rise in scrap supply entering the market. The global backdrop has added pressure, with spot gold down about 2.8% this week as higher energy prices keep inflation concerns alive and reinforce expectations that interest rates will stay higher for longer. As reported by a jeweller in Hyderabad, the sudden price jump made investors sell, and both jewelers and retail buyers stayed away from the market.
In stark contrast to India's weakening market, China continues to trade at premiums of $15–$20 per ounce over global benchmark prices, broadly unchanged from last week, as reported by Reuters. The difference lies in demand composition, with Chinese buying supported by steady investment interest and strong industrial consumption, particularly from solar and electronics manufacturers. According to Bernard Sin, regional director of Greater China at MKS PAMP, premiums remained steady this week, supported by resilient investment demand and aggressive industrial buying. Import restrictions remain a key constraint, though loosening is widely anticipated soon. Industrial stockpiling by solar and electronics firms is particularly aggressive, amplified by the removal of VAT export rebates. ANZ notes that strong demand from China may balance out weaker demand from India after these policy changes.
Across other Asian hubs, gold pricing remains mixed with Hong Kong trading at par to premiums of $2, Japan selling at a discount of $0.50, and Singapore offering premiums of $1 to $3.30, according to Reuters. The divergent trends highlight how policy changes, demand shifts and regional buying patterns are reshaping physical bullion pricing across Asia. The contrasting performance between India and China demonstrates how regional policy environments significantly impact gold market dynamics across Asia. In Hong Kong, gold traded at par to premiums of $2, in Japan at a $0.50 discount, and in Singapore at premiums of $1 to $3.30, as reported by Amazon Great Summer Sale.
