Gold Demand Rises in India as Prices Correct, China Sees Safe-Haven Buying
By Rajendra Jadhav and Ashitha Shivaprasad
Gold demand in India has seen an uptick this week as prices corrected, attracting buyers who were waiting for a price drop. However, market volatility has caused some buyers to hold off on their purchases. In China, premiums have strengthened due to safe-haven buying.
According to a Mumbai-based bullion dealer, there is pent-up demand in the Indian market, and buyers are taking advantage of the price correction. Domestic prices in India were around 69,600 rupees per 10 grams on Friday, after hitting a four-month low of 67,400 rupees on July 25. Dealers were charging a premium of up to $9 an ounce over official prices, compared to last week's $7 premium.
The correction in prices has come just before the festival season in India, leading to expectations of good orders during the ongoing India International Jewellery Show in Mumbai.
In China, gold was sold at par to an $18 premium, reflecting subdued retail sales of gold jewellery but increased interest in gold bars as a safe-haven asset. China's central bank refrained from buying gold for the third consecutive month in July, with analysts divided on when the purchases will resume.
Japanese dealers were selling gold at premiums of $0.25 to $1, with sales increasing when Japanese stocks fell sharply earlier in the week. In Singapore, bullion was sold at par to a $1.25 premium per ounce, while in Hong Kong, prices ranged from a $0.5 discount to a $2 premium.
Analysis: The correction in gold prices has led to increased demand in India, with buyers taking advantage of lower prices. In China, safe-haven buying has supported premiums, while subdued retail sales have shifted interest towards gold bars. The central bank's pause in gold purchases has created uncertainty, with analysts split on when buying will resume. Japanese dealers saw increased sales during stock market downturns, highlighting gold's role as a hedge asset. Overall, the current market conditions suggest a mix of price-driven demand and safe-haven buying, which could impact global gold prices in the coming months.