Gold demand in Asia’s major markets has slowed sharply as prices climb to record levels, with India’s domestic gold rate reaching 84,910 rupees per 10 grams.
This marks an increase of more than 10% so far in 2025, following a 21% rise in 2024. The rapid price appreciation has disrupted usual trading patterns: Indian dealers are currently offering discounts of up to $31 per ounce relative to domestic prices, while Chinese market discounts are around $7–$10 per ounce.
Supply-side factors are intensifying the pressure. Bullion banks are reallocating shipments toward the U.S. to capture larger futures premiums, reducing the volume available in Asian markets. That shift has tightened local supply and, under ordinary conditions, could push discounts even higher.
As the market adjusts, buyers and sellers are recalibrating strategies. Retail demand in India, traditionally driven by festivals and weddings, is sensitive to even small price movements; elevated rates can suppress purchases or delay transactions. In China, institutional and retail participants are weighing the cost of higher spot prices against alternative investments and physical allocation.
Traders report that logistics and timing are also affecting spreads. When bullion leaves Asia for higher-yielding markets, local inventories fall and dealers widen discounts to clear stock or maintain margins. Conversely, any reversal of flows back into Asia could narrow spreads, but that will depend on futures curves and relative returns across markets.
Analysts say several variables will determine how this episode unfolds: global interest rates, central-bank buying patterns, and industrial and jewellery demand in key consuming economies. If futures premiums in other regions remain attractive, continued diversion of shipments could prolong tighter local supply, sustaining wider discounts in Asia. Alternatively, stronger physical demand or increased mine and recycle supply could help rebalance the market.
For consumers and investors in Asia, the current environment underscores the importance of timing and market awareness. Those considering purchases should factor in local premiums, potential further discounting, and short-term volatility. Market participants will be watching shipment flows and futures markets closely for signals about when regional spreads might normalize.