Gold Prices India: Premiums Hit 10-Week High on Tight Supply, China Demand

Gold prices India saw dealers charge premiums of up to $8 an ounce, the highest in over 10 weeks, as a sudden supply crunch hit the world's second-largest bullion market. The Silicon Review reports on how Chinese demand and Iran war disruptions are reshaping regional gold flows.

Gold dealers in India were forced to offer the steepest discounts in three months last week, slashing prices by up to $20 an ounce below official domestic rates, as a sudden surge in import costs triggered by the Iran war sent local prices rocketing past global benchmarks. The unprecedented price inversion has crushed retail demand in the world's second-largest bullion market.

The turmoil stems from a severe shortage of US dollar liquidity among Indian banks. With the Strait of Hormuz closed for the seventh consecutive week, dollars that would normally flow through trade channels have dried up. Banks that would typically import gold on open account have stopped offering that facility, forcing importers to pay cash upfront a requirement that has choked off supply.

Since physical gold cannot be moved without dollars, premiums that dealers can charge above official prices have evaporated. Instead, dealers were forced to offer discounts to clear existing inventory and raise cash. Two dealers confirmed that no deals had been settled in the previous two days, as buyers held out for even lower prices.

"Everyone is just sitting on the sidelines," said a Mumbai-based dealer with a private bank, adding that jewellers were selling old gold and offering deep exchanges rather than purchasing fresh metal.

The contrast with other Asian hubs could not be starker. Singapore premiums rose to $5–$6 an ounce from last week's $2–$4, as global prices stabilized around $3,320 per ounce. Hong Kong premiums climbed to $2–$3 from $1–$2, while premiums in Tokyo jumped to $2–$5 from $0.50–$1.50 last week.

In China, the world's biggest bullion consumer, local gold prices were trading at a premium of $15 to $20 an ounce over benchmark spot prices, up from $5 to $15 last week, marking the highest level since mid-January . Wholesalers reported robust buying ahead of the Labour Day holiday, traditionally a peak season for gold jewellery purchases.

"The summer wedding season is coming, and couples want to lock in prices now," said Beijing-based dealer Chen Wei. "No one believes gold will get cheaper with the war dragging on and the dollar under pressure."

As gold prices India face an unprecedented crunch while premiums soar across Asia and Chinese demand hits new highs, The Silicon Review examines how the Iran war has fractured global gold supply chains and why the world's second-largest bullion market is suddenly starving for metal.

About the Author

Sashindra Suresh is an experienced writer specializing in artificial intelligence, software development, and emerging technologies. With a strong ability to translate complex technical concepts into clear, engaging insights, she has contributed to a wide range of publications and platforms. Her work focuses on making cutting-edge innovations accessible to both industry professionals and curious readers alike.