Gold demand rises in India as prices ease

Physical gold demand in India has picked up this week as lower prices coincide with the key Dhanteras and Diwali festivals. Retail buyers are stepping up purchases following a recent decline in domestic prices, with jewellery stores reporting higher customer traffic in major cities such as Mumbai.

In India, domestic gold prices were trading around 141,600 rupees per 10 grams on Friday, after having fallen to 137,863 rupees last week, the lowest level since March 24. The pullback in prices has encouraged consumers to advance buying for the festive period, traditionally one of the busiest times for gold purchases in the world’s second-biggest consumer of the metal.

Dealers in India are quoting a premium of up to $4 an ounce over official domestic prices this week. This premium includes 15% import and 3% sales levies and reflects revived retail interest as buyers return to the market ahead of Dhanteras, which marks the start of the five-day Diwali festival of lights.

Jewellery outlets are seeing increased footfall, and wholesalers note that retail buying has improved significantly compared with earlier in the season. However, ongoing price volatility is limiting a sharper rise in demand, with expectations that purchases will strengthen further on Dhanteras, traditionally a major gold-buying day.

The improvement in Indian demand is part of a wider uptick in physical gold buying across major Asian hubs. Global benchmark gold prices slipping below $4,000 an ounce have drawn buyers back into the market, supporting physical offtake in the region.

In China, bullion is trading from flat to a $9-an-ounce premium over global benchmark prices. There are signs of increased interest in the jewellery segment from a low base as prices moved below the $4,000 level, indicating that recent price movements are influencing consumer behaviour across key Asian markets.