India gold premiums at decadal high; China demand undeterred by price rise

BENGALURU/MUMBAI: Gold premiums in India rose to a more than decade-high on strong investment demand ahead of a likely duty hike, while premiums in China jumped due to a pickup in investment and jewellery demand despite global rates touching a record near USD5,600 this week.

Bullion dealers in India charged a premium of up to USD121 per ounce this week over official domestic gold prices – inclusive of 6percent import and 3percent sales levies – the highest since May 2014. Last week, dealers were charging premiums of up to USD112.

“Anticipating a duty hike in the budget, investors were paying a premium over record prices to buy gold,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Finance Minister Nirmala Sitharaman is set to present the 2026-27 Union Budget on February 1. She had slashed import duties on gold and silver to 6percent from 15percent in July 2024. “This week, we witnessed some of the highest volatility in the market.

Not only were international prices volatile, but the rupee also fluctuated wildly. This severely affected retail jewellery buying,” said a said a Mumbai-based bullion dealer with a private bank. Domestic gold prices hit a record high of 180,779 rupees (USD1,967.77) per 10 grams on Thursday.

India’s gold demand is likely to fall in 2026 following an 11percent drop last year, the World Gold Council (WGC) said on Thursday. In China, bullion traded at premiums of up to USD32 an ounce above the global benchmark spot price this week, up from last week’s premium of USD8. With elevated gold prices, customers have been flocking to precious metal traders in Shanghai and Hong Kong, with some betting it could rise even further.

“We can see some physical selling interest from people looking to sell their jewellery at these higher prices.