Record prices cool gold demand in key hubs, China discounts hit over 9-month high

Physical gold demand across major Asian markets was muted this week as record-high prices deterred retail purchases, with discounts in China reaching more than nine-month highs.

Spot gold prices touched a record high of $3,673.95 per ounce on Tuesday.

In China, dealers offered discounts of $17-$24 per ounce over global benchmark spot prices , compared to $12-$16 last week.

“Near record gold prices are weighing heavily on domestic Chinese gold demand, especially jewellery demand,” independent analyst Ross Norman said.

“Physical gold holdings on the Shanghai Futures Exchange continue to rise and now exceed 50 metric tons while trading volumes on the Shanghai Gold Exchange are also at a four-month high.”

Meanwhile, China’s central bank extended its gold purchases into a 10th consecutive month in August, official data showed on Sunday. India’s domestic gold prices hovered around 109,500 rupees per 10 grams on Friday, after reaching a record 109,840 rupees earlier this week. Dealers quoted discounts of $6 and premiums of $2 per ounce over official domestic prices, inclusive of 6% import and 3% sales levies, compared to last week’s discounts of up to $12.

“Retail buyers want to jump in, but the recent price rally has them holding back. They’re waiting for prices to cool off before making a move,” a New Delhi-based jeweller said.

Jewellers want to stock up for the festive season, but with prices climbing, they are not too sure how strong retail demand will be, a Mumbai-based dealer with a private bank said.

Indians will celebrate the Dussehra and Diwali festivals in October, when buying gold is considered auspicious.

In Hong Kong , gold was sold at par to a $1.60 premium, while in Singapore , premiums ranged from par to $2.20.

There has been a notable shift, particularly in Southeast Asia, from jewelry to bullion, with growing focus on investment products such as bars, a trend expected to drive stronger demand in the future, said Brian Lan, managing director at GoldSilver Central.

Japan’s bullion traded at a discount of $0.50 to a $1 premium. (Reporting by Anmol Choubey in Bengaluru and Rajendra Jadhav in Mumbai; Editing by Rashmi Aich)