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Asia’s Gold Market Diverges: India’s Demand Slumps While China’s Bullish Bets Persist

As May 2025 concludes, the Asian gold market presents a tale of two economies: India, where physical demand has waned due to seasonal and price-related factors, and China, where speculative interest remains robust despite signs of market saturation.

India: Seasonal Lull and Price Sensitivity Suppress Demand

In India, the world’s second-largest gold consumer, physical demand has softened. Domestic gold prices have climbed to approximately ₹94,900 per 10 grams, deterring buyers and prompting dealers to offer discounts of up to $31 per ounce over official prices, down from $49 the previous week. The conclusion of the wedding season and the onset of the monsoon have further dampened demand, as jewellers anticipate a seasonal dip and hold off on new purchases.

China: Speculative Interest Remains Despite Oversupply Concerns

Conversely, in China, the gold market exhibits a different dynamic. Bullion traded at par to a $15 premium per ounce over the global benchmark, a slight decrease from the previous week’s $16-$30 premiums. This adjustment reflects a potential oversupply, as imports via Hong Kong nearly tripled in April, reaching their highest level in over a year.

Despite the reduced premiums and signs of market saturation, speculative interest on the Shanghai Futures Exchange (SHFE) remains strong. As noted by Hugo Pascal, “Gold bullish bets remain predominant on the SHFE despite lower trading volume.”

Regional Premiums Reflect Varied Market Sentiments

Other Asian markets display varied premiums, indicating differing market sentiments:

Hong Kong: Gold sold at a premium ranging from $0.30 to $1.30 per ounce.

Singapore: Trades occurred between at-par prices and a $2.50 premium.

Japan: Bullion was sold at par to a premium of $0.50.

These figures suggest that while some markets experience subdued demand, others maintain steady interest, influenced by local economic conditions and consumer behaviors.

Conclusion: Navigating a Complex Gold Landscape

The current landscape underscores the complexity of the gold market in Asia. India’s demand is influenced by seasonal patterns and price sensitivity, leading to a temporary lull. In contrast, China’s market is characterized by strong speculative activity, even amidst concerns of oversupply.

Investors and market participants should remain vigilant, monitoring regional trends and economic indicators to navigate this multifaceted environment effectively.