Asia’s Gold Market Diverges: India’s Demand Slumps While China’s Bullish Bets Persist
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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.
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.
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.”
Other Asian markets display varied premiums, indicating differing market sentiments:
These figures suggest that while some markets experience subdued demand, others maintain steady interest, influenced by local economic conditions and consumer behaviors.
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.
Hugo Pascal’s observation about the AU9999 contract hitting a 10-week volume high underscores the increasing significance of physical gold trading on the Shanghai Gold Exchange. This trend not only highlights robust domestic demand in China but also reflects broader shifts in the global gold market toward physical-backed assets.
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