Soaring gold prices are weighing on physical demand across Asia, says Commerzbank commodity analyst Barbara Lambrecht. In India, where gold recently reached record highs when priced in rupees, imports tumbled to just 21 tonnes in June — the lowest monthly total since April 2023 — helping drive a 30% year‑on‑year decline in first‑half imports to 204 tonnes. Swiss export statistics mirror this weakness: shipments to mainland China fell 39% month‑on‑month to 16.7 tonnes, exports to India plunged about 71% to below 3 tonnes, and deliveries to Hong Kong dropped roughly 35% to under one tonne.
The pattern is notably different in Europe. Swiss exports to the United Kingdom rose substantially, reflecting robust investor interest in gold. That demand shows up clearly in the exchange‑traded fund (ETF) market: European gold ETFs attracted sizable inflows of roughly 23 tonnes in June, according to the World Gold Council. Those investment flows are helping to offset weaker physical buying in price‑sensitive Asian markets, highlighting a divide between consumer and investor behavior across regions.
High local prices in Asia have constrained jewellery purchases and traditional retail buying, particularly in major markets such as India and China, where consumers are more price‑sensitive. By contrast, European investors have responded to macroeconomic and financial market signals by increasing allocations to gold via ETFs, a more price‑responsive channel for investors seeking portfolio diversification or a hedge against volatility.
The divergence between physical demand in Asia and investment demand in Europe underscores how regional differences in buyer type and purchasing behavior can shape global flows. While Asian consumers and retailers cut back on physical purchases as prices rose, institutional and retail investors in Europe boosted ETF holdings, supporting overall market liquidity and helping to absorb some of the supply that would otherwise have gone into bullion and jewellery channels.
Looking ahead, continued high prices could keep restraining jewellery and retail demand across Asia unless local currencies or gold prices adjust. At the same time, persistent macroeconomic uncertainty or renewed market volatility might sustain or increase investor appetite for gold ETFs in Europe and elsewhere, maintaining a counterbalance to softer physical consumption in price‑sensitive regions.