India Gold Discounts Widen to $19 as China Buying Streak Hits 20 Months

Indian jewelers are cutting gold prices by as much as $19 an ounce this week as sharp volatility freezes retail buying, while China’s central bank keeps adding to its reserves.

The contrast highlights diverging gold strategies across Asia’s two largest markets during a volatile month for the metal. Spot prices dropped to a seven-month low in late June before rebounding, fueling the wide swings dealers cite this week.

India’s Discounts Deepen as Buyers Hesitate

Dealers in India cut prices by up to $19 an ounce this week, according to Reuters. Sharp volatility has discouraged fresh purchases, and many buyers are avoiding the market entirely.

Retail activity has shifted toward exchanging old jewelry for new pieces, so jewelers do not need to restock as often. This shift lowers demand for freshly mined bullion and keeps discounts elevated. Indian jewelry volumes fell 19% year over year in the first quarter, while investment demand for bars and coins climbed, according to World Gold Council data.

Buyers are weighing gold’s July price outlook before committing fresh capital, dealers said.

China’s Central Bank Extends Its Buying Streak

The People’s Bank of China added 480,000 ounces of gold in June, marking its 20th consecutive month of purchases. The streak ranks among the longest since 2015 and signals Beijing’s push to diversify reserves away from the dollar. Total holdings have grown to roughly 2,346 tonnes, under 10% of China’s overall foreign-exchange reserves.

Steady accumulation has helped stabilize spot prices even as broader demand cools. JPMorgan recently trimmed its Q4 price target, citing softer momentum, though Chinese purchases continue to offset some of that pressure. This pattern echoes the central banks’ gold buying trend recorded earlier this year.

Hong Kong Pushes to Become a Regional Gold Hub

Meanwhile, Hong Kong launched a central clearing system for gold on July 7 and revived dollar-denominated futures trading. Volumes on the new contracts hit a record high, more than double the previous peak set in 2022. The exchange waived trading fees for a year, an incentive designed to draw banks and bullion producers into the new market.

The moves aim to cement Hong Kong’s role as a settlement and pricing center for Asian gold flows. A planned yuan-denominated contract, backed by the Shanghai Gold Exchange, could eventually rival established dollar benchmarks. Investors weighing gold’s long-term outlook may watch how this new infrastructure affects regional premiums in the months ahead.

Analysts will track whether Chinese buying continues to offset soft Indian demand in the coming weeks. Some retail investors are comparing gold’s appeal against Bitcoin as portfolios shift toward safer assets. A weaker rupee and looming festival-season buying could reshape Indian demand before the year ends. Hong Kong’s new infrastructure and Beijing’s reserve strategy could jointly shape gold pricing well beyond this quarter.