This week, the rising prices of gold have led to a decrease in demand for physical gold in many Asian markets. In India, gold prices reached a record high of ₹80,034 (about $927.69) for every 10 grams on Friday, which is the highest ever recorded.
The increase in gold prices is largely due to international market trends, where the price of gold is close to its all-time high of $2,790.15, a level that hasn’t been seen since October 31.
A dealer in Chennai mentioned that because of the high prices, very few people were buying gold this week. Jewelry stores reported fewer customers than usual, indicating a significant drop in retail demand.
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In India, gold dealers were offering discounts of up to $38 per ounce compared to the official domestic prices. This is a change from the previous week when the discount was $30 per ounce. The discounts take into account various taxes, including a 6% import tax and a 3% sales tax. Many jewelers are holding off on making purchases because there are rumors that the government might adjust the import tax rates in the upcoming federal budget, which will be presented by Finance Minister Nirmala Sitharaman on February 1. This follows a significant reduction in import taxes on gold in last year’s budget.
In China, another major consumer of gold, dealers are offering discounts of $10 and charging an additional premium of $10 per ounce above the international prices. This is a change from last week when the premiums ranged from $3 to $13. Although gold prices in China are also high, some people are still buying gold due to the upcoming holiday season.
In Hong Kong, gold was being sold at the same price as international rates, with a slight premium of $2. In Japan, prices varied slightly, with gold being sold at either a $1 discount or a $1 premium.
A trader in Tokyo noted that many trading companies are hesitant to buy gold as prices continue to rise. Overall, the combination of high prices and uncertainty about future tax changes is causing a slowdown in gold purchases across the region.
