India’s Gold Demand Slumps Amid Price Volatility as China’s Premiums Shrink.

Gold demand in India has remained subdued this week as buyers exercise caution amidst a significant rise in prices and elevated import duties. Dealers in India reported discounts of up to $106 per ounce over official domestic prices, marking an increase from previous discounts of $78 an ounce. The increased import duty of 15% has further dampened sentiment, with domestic gold prices rising on Friday yet remaining vulnerable after hitting a two-week low at 153,451 rupees per 10 grams.

The driving factors behind this market volatility include geopolitical tensions and resultant policy changes, notably India’s decision to hike import tariffs. This increase in duties from 6% to 15% has created a ripple effect, leading to cautious behavior among jewellers who are reluctant to build stock amidst uncertain consumer demand. Concurrently, in China, premiums have contracted as market sentiment weakens, reflecting a hesitancy to invest in gold amidst ongoing geopolitical conflicts, particularly in the Middle East, which further feeds into the caution seen in retail buying patterns.

In the short term, traders and investors should brace for continued volatility, particularly given spot gold’s trajectory towards a potential third consecutive monthly loss and its recent drop to a two-month low. A key support level has been identified at $4,360, with some analysts suggesting the potential for renewed buying interest if prices stabilize above this threshold. However, the prevailing market uncertainty rooted in geopolitical developments and fluctuating demand indicates a cautious approach may be prudent for investors in the near future.

Source: Market Source

(Expert Note: This report was independently prepared by the Wealthova Commodities team.)