Gold Frenzy in Asia: India Leads Surge in Physical Demand Amid Price Rally

Highlights:

• Spot gold prices climbed above US $4,300 per ounce this week, at the time of writing, as renewed US-China trade tensions and rate-cut expectations boosted demand.
• In India, gold prices hit a record ₹131,699 per 10 grams, with premiums soaring to US $25 per ounce — the highest in over a decade ahead of the festive season.
• Gold smuggling in India has spiked amid record-high prices and supply shortages, as jewellers stock up for Dhanteras and Diwali.

Spot gold soared past US $4,300 per ounce this week, as global market tensions and hopes for a US rate cut fuelled investor appetite. At the time of writing, renewed US-China trade friction is amplifying demand for safe-haven assets.

India Pushes Premiums to Decade Highs

In India, local gold prices reached a historic high of ₹131,699 per 10 grams, as dealers quoted premiums as steep as US $25 per ounce above official rates, up from around $15 last week. Jewelers and bullion shops began stocking ample supply of small-denomination coins and bars, preparing for the auspicious buying season tied to Dhanteras and Diwali.

Smuggling Escalates Amid Supply Crunch

Record prices and tight supply have triggered a sharp rise in gold smuggling, say government and industry officials. Custom and DRI (Directorate of Revenue Intelligence) authorities report multiple foiled smuggling attempts at airports. With margins ballooning, smugglers are exploiting festival demand to swiftly launder gold into local markets.

Diverging Trends Across Asia

While India is witnessing frenzied buying, other Asian markets portray a more cautious picture. In China, bullion is trading at discounts of $20–$66 per ounce relative to global benchmarks, reflecting a more tempered demand recovery. In Hong Kong and Singapore, premiums range from slight discounts to marginal markups; Japan is seeing modest premiums over spot prices.

Outlook: Demand Under the Spotlight

Momentum remains strong, at least in the near term, driven by festival season demand and elevated local premiums. However, sustainability is unclear. Should gold prices cool or global tensions ease, some of the speculative fervour may taper. Meanwhile, authorities in India are likely to stay vigilant against escalating smuggling risks and supply distortions ahead.

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