Gold Demand Soars in India as Prices Shatter Records

Gold prices surged past $4,000 an ounce for the first time this week. This historic rally occurred amid global economic uncertainty and shifting U.S. rate expectations. According to Reuters, the record price did little to deter buyers in India.

The rally coincided with preparations for key festivals. Indians consider buying gold during Dhanteras and Diwali highly auspicious. This cultural tradition is propping up physical demand despite the soaring costs.

Festive Buying Offsets High Prices in Key Market

Indian dealers reported strong activity. Premiums paid over the official domestic price jumped to $15 per ounce. This is a significant increase from the $9 premium seen just a week ago.

A bullion dealer in Mumbai noted exceptionally strong investment demand. Investors are buying aggressively, expecting prices to climb even higher. Domestic prices in India reached a record of 123,677 rupees per 10 grams.

Retail jewellery sales are currently slower. However, dealers in New Delhi anticipate a pickup next week. The Diwali festival is the peak gold-buying period in the country.

Contrasting Trends Emerge in Asian Gold Hubs

The market response in China was markedly different. Demand was lacklustre following a long national holiday. To attract buyers, dealers offered substantial discounts of $48 to $60 per ounce.

Peter Fung of Wing Fung Precious Metals explained the trend. He said investment in bars and coins remains strong as a safe haven. However, jewellery demand is low, with many consumers waiting for a price correction.

In Hong Kong, the high prices triggered a selling spree. Residents rushed to cash in gold bars and rings. Gold was traded at par to a small premium in Singapore and Japan.

The global gold market is experiencing unprecedented volatility. Record-breaking prices are creating a clear divergence in regional demand. This divergence highlights the complex interplay between investment strategy and cultural traditions in the world of gold.

Thought you’d like to know-

Why did gold prices hit a record high?

Gold surpassed $4,000 an ounce due to geopolitical tensions and economic uncertainty. Expectations of U.S. interest rate cuts also boosted its appeal as a safe-haven asset.

How is India’s gold demand defying high prices?

Upcoming festivals like Dhanteras and Diwali are driving purchases. Buying gold is considered auspicious during this period, sustaining demand despite the cost.

What is the gold demand situation in China?

Demand in China is muted following a long holiday. Dealers are offering large discounts to attract buyers who are hesitant at current price levels.

How are investors reacting to the price surge?

Many investors are buying more, expecting further price increases. This strong investment demand is supporting the market even with record-high valuations.

What was the market response in Hong Kong?

Hong Kong residents are selling their gold holdings to profit from the rally. There is a notable trend of people cashing in jewelry and bars.