Record Gold Prices Stall Indian Demand While Chinese Buyers Stay Active

Physical gold demand in India has all but evaporated as domestic prices climb to unprecedented levels. Dealers have been forced to offer unusually steep discounts—up to $74 per ounce—relative to official local prices in an effort to move inventory. Indian domestic gold has reached a new peak of 95,894 rupees per 10 grams, a price point that many market participants had not expected only months ago.

Why Indian Demand Has Fallen

Higher retail gold prices make purchases less attractive for typical buyers, including those who buy for jewelry, investment or ritual purposes. In response, some banks and large distributors who imported gold at lower rates earlier in the spring are now attempting to sell those holdings at marked discounts to align with prevailing market conditions. These supply-side moves have created a visible gap between official domestic quotations and what sellers are willing to accept in cash trades.

Part of the recent shipment activity occurred ahead of Akshay Tritiya, a major buying period in the Indian market when consumers traditionally purchase gold. Despite those imports, the sharp price rise at the time of the festival is expected to significantly dampen demand, as many consumers postpone purchases or reduce the quantity they buy in fear of paying peak prices.

Discounts, Inventories and Festival Effects

Dealers offering discounts on inventory imported at lower costs is a short-term tactic to generate sales and clear stock. While discounts can stimulate some buying, the magnitude of the recent price surge appears to have outweighed these incentives for many buyers. The confluence of record domestic prices and the end of a major buying window has led to historically muted foot traffic at retail outlets, and jewelers have reported slower sales volumes as consumers reassess purchases.

Because banks increased imports in March when global prices were lower, these institutions now find themselves positioned to provide supply at discounted rates compared with official local quotations. That dynamic has put additional pressure on spot prices quoted by smaller sellers and has injected more variability into the domestic market.

China Continues to Buy Despite High Prices

In contrast with India, China has continued to show resilient demand for physical gold even as prices hit records. Dealers in China are currently charging premiums in the range of $15 to $21 per ounce—lower than the previous week’s reported premium band of $24 to $54 per ounce, but nonetheless indicative of active buying. The fact that Chinese consumers and investors remain engaged at these levels is noteworthy, since Asian buyers are generally considered to be sensitive to price swings.

Independent analyst Ross Norman described this sustained Chinese demand as “a departure from the norm,” highlighting the contrast with more price-sensitive behavior typically observed across the region. While premiums have eased from their recent highs, the continued willingness of buyers in China to pay above spot underscores differing market dynamics between the two largest Asian gold-consuming countries.

Market Implications and Short-Term Outlook

The current picture suggests a bifurcated regional demand story. In India, high retail prices have temporarily suppressed physical demand and prompted aggressive discounting by sellers and importers who previously bought at lower prices. This could contribute to muted retail activity in the near term, especially if consumers delay purchases until prices stabilize.

Meanwhile, ongoing Chinese demand, even at reduced premiums, may help sustain overall bullion markets. Differences in local premiums and inventory positions between India and China are likely to influence regional flows and dealer behavior for the coming weeks. Market participants will be watching whether discounts in India attract renewed buying, or whether the price-sensitive domestic market remains sidelined until volatility eases.

Overall, the divergence between subdued Indian retail demand and persistent Chinese buying highlights how local price levels, import timing and cultural buying patterns can produce distinct outcomes across major gold markets in Asia.