India’s gold demand recovers slightly but remains below average

Gold demand in India picked up in the latter half of the week, but still remained below average as prices moved down from record highs.

Meanwhile, traders in China continued to offer discounts amidst lackluster activity, according to a Reuters report.

“Demand has started to trickle in as prices come down, but many buyers remain on the sidelines,” a jeweller based in Ahmedabad, India was quoted in the report.

Jewellery sales down

On Thursday, Invezz reported that retail gold jewellery sales in India were down 70-80% in the first couple of months this year. 

“As of mid-February 2025, Indian gold dealers are offering discounts of $30 to $38 per ounce compared to international prices, primarily due to high domestic prices and subdued demand during the wedding season,” Prithviraj Kothari, managing director of RiddiSiddhi Bullions Limited (RSBL) told Invezz.

Gold prices in India reached a record high of 86,592 rupees per 10 grams last week, but have since fallen to around 84,750 rupees as of Friday.

Indian dealers this week have reduced the discount on gold prices. 

Discounts ease

They are now offering a discount of $12-$27 an ounce over official domestic prices, which includes a 6% import duty and a 3% sales tax. 

This is a decrease from the $35 discount offered last week, according to the report.

A Mumbai-based dealer with a bullion importing bank said:

Supplies are tightening as there were hardly any imports by banks this month. Discounts are decreasing.

Kumar Jain, the owner of Umedmal Tilokchand Zaveri stores in Mumbai told Invezz that gold imports were just around 15 tons this month, which was significantly down from the same period last year. 

Record high prices of gold have weighed on imports and has created an acute shortage in the country. 

India’s gold imports are expected to experience a significant decline in February, plummeting by 85% compared to the same period last year. 

This drastic reduction is projected to result in the lowest import levels in two decades.

Jewellers had told Invezz that consumers are currently recycling their old gold instead of purchasing new ones.

People are also opting for lighter carat jewellery because of higher prices.

Southeast Asia

Meanwhile, in China, the world’s leading gold consumer, the precious metal was trading at a discount of $3 compared to spot prices.

This indicates a weaker demand for gold in the Chinese market.

“There is virtually risk free profit in shipping bars to CME registered vaults in New York just now and this is draining physical liquidity from other markets,” independent analyst Ross Norman told Reuters.

Gold was being offered by dealers in Hong Kong at between a discount of $1.80 and a premium of $2.30 per ounce.

In Singapore, a dealer stated that gold was trading at between a discount of $0.50 and a premium of $3.

Bullion in Japan was sold at a discount as high as $6 and a premium as high as $1.5.

A Tokyo-based trader said that people are waiting for prices to drop before buying, which has resulted in sales volume exceeding buybacks.

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