Explained | Why gold is suddenly trading at a discount in India

Gold traded at a discount in India this week for the first time in nearly a month as sharp price swings weighed on consumer demand, while buying interest in China stayed firm ahead of the Lunar New Year.

Bullion dealers in India offered discounts of up to $12 per ounce over official domestic prices, which include 6% import duty and 3% sales tax. This compares with premiums of as much as $70 per ounce last week.

“Jewellery demand has not recovered despite jewellers offering discounts on making charges. Retail buyers are not comfortable making purchases at current price levels,” a Hyderabad-based jeweller said.

Domestic prices were around ₹1.54 lakh per 10 grams on Friday (February 13), after dropping to ₹1.33 lakh per 10 grams last week.

Traders said many jewellers and bullion dealers have deferred fresh purchases from banks, expecting the government to allocate about 80 metric tonnes of gold imports from the UAE at concessional duty this month.

Under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), gold and silver shipments from the UAE attract lower import duties.

In China, physical gold traded between a discount of $8 and a premium of $10 per ounce to global spot prices ahead of the nine-day Lunar New Year holiday starting February 15, a period typically associated with strong seasonal demand.

Independent analyst Ross Norman said elevated prices have moderated buying to some extent, but overall demand remains positive. He also noted that the People’s Bank of China continues to add to its gold reserves at a modest pace and described jewellery consumption as resilient despite market fluctuations.

Across other Asian centres, gold traded at par to a premium

of $1.80 per ounce in Hong Kong. In Japan, prices ranged from a $6 discount to a $1 premium, while in Singapore bullion was quoted between a $0.50 discount and a $3.50 premium.

Market participants said domestic prices appear to be stabilising after recent turbulence, supported by global economic uncertainty, currency movements and shifting central bank policy expectations that continue to underpin safe-haven demand.

Prashant Mishra, Founder and CEO of Agnam Advisors, said silver typically exhibits higher volatility than gold because of its dual role as both a precious and industrial metal. He added that while short-term corrections and profit-taking may persist, the broader outlook for both metals remains constructive amid uneven global growth and policy uncertainty.

He suggested that a 10–15% allocation to gold and silver in a diversified portfolio could help enhance long-term stability.

Sandip Raichura, CEO of Retail Broking and Distribution and Director at PL Capital, said gold has rebounded after a sharp decline at the end of January and could move toward $6,000 per ounce by the end of calendar year 2026. He cited inflationary pressures, geopolitical risks and continued central bank purchases as supportive factors.

Aksha Kamboj, Vice President of the India Bullion & Jewellers Association and Executive Chairperson of Aspect Global Ventures, said gold is witnessing some profit-booking after recent highs, though investor sentiment remains positive on the longer-term trajectory of the metal.

-With Reuters inputs