India’s Festive Season Drives Asia Gold Premiums to Highest in Over a Decade
Gold markets in Asia have experienced a significant surge in premiums as the festive season in India boosts demand. This week, premiums in India have reached their highest in over a decade, coinciding with spot gold prices climbing to unprecedented levels.
Record Prices Amid Festival Demand
In India, premiums on gold have climbed up to $25 per ounce, a noticeable increase from the $15 charged the previous week. The increase comes as domestic gold prices reached a record 131,699 rupees per 10 grams. Indian wholesalers are preparing for Dhanteras and Diwali, festivals that traditionally see a spike in gold purchases.
Impact of Global Market Tensions
Spot gold prices globally surpassed $4,300 per ounce for the first time on October 17. This rise is fueled by renewed U.S.-China trade tensions and the anticipation of a U.S. interest rate cut. Bullion dealers report that these factors have led to both heightened investor interest and increased preparations by jewellers for the upcoming festivals.
- Gold premiums in India: Up to $25/oz
- Record gold price in India: 131,699 rupees/10 grams
- Spot gold global price: $4,300/oz
Gold Market Dynamics Across Asia
The demand has not been limited to India. In China, premiums and discounts on gold ranged between $20 to $66 an ounce over global spot prices. According to an InProved trader, global demand for precious metals remains robust.
Hong Kong and Singapore followed suit, with gold trading fluctuating slightly. Hong Kong saw modest premiums, while Singapore experienced a range of discounts to small premiums. In Japan, investors were undeterred, buying gold despite a slight premium over spot prices.
Gold Smuggling and Investment Interest
Due to high local prices, gold smuggling into India has increased as supply trails robust demand. Despite some selling of jewellery for profit-taking, investment interest in gold continues to soar.
| Country | Premium/Discount |
|---|---|
| India | Up to $25/oz premium |
| China | $20 to $66/oz discount/premium |
| Hong Kong | Par to $1.30/oz premium |
| Singapore | $0.50 discount to $1.30/oz premium |
| Japan | $1/oz premium |
As the situation evolves, traders are closely watching market movements with an eye on further shifts as festivals approach. Gold remains a focal point for investors amid geopolitical uncertainties.
