India’s gold premiums jump on jewellers’ hopes of demand revival

Wed Sep 24 2025

India’s premium on physical gold delivery has increased to $7 an ounce from discounts earlier, as jewellery manufacturers and bullion traders have stepped up purchases on expectations of further rise in prices in coming days. The change in sentiment comes as the industry gears up for the busy festival season, including Dussehra and Dhanteras. Though high prices have depressed retail jewellery demand, the yellow metal has rebounded from a discount of $6 an ounce over the last few days, said a leading jewellery manufacturer.

Though consistent rally in gold prices has forced jewellery buyers to the sidelines, the market expects the demand to revive in the next few days with consumers getting adjusted to current price levels, he said.

Imports stay strong. On the supply side, he said gold imports have remained strong with 102 tonnes in the June quarter alone while jewellery demand has lagged at 89 tonnes.

Gold prices increased 7 per cent in the first half of September to ₹1,06,863 per 10 gm, taking the year-to-date increase to 44 per cent..Kavita Chacko, Research Head, India WGC, said signs of demand interest have helped narrow domestic price discounts, which briefly flipped to a marginal premium in late August and again in mid-September.

This marks a noteworthy change, as domestic gold prices had been trading at a near-sustained discount since December, she said.

GST cut boost

Gold being a dollar-denominated metal, the weak rupee (down 3 per cent y-t-d) against dollar also strengthened domestic gold prices.

Bullion dealers have stepped-up purchases since early September in anticipation of stronger seasonal demand and a potential boost from increased consumer spending from the forthcoming reduction in Goods and Services Tax, said Chacko.

The tax cut on a range of items, including consumer goods, durables and automobiles-takes effect from Monday, just as the festive season enters its peak following a 16-day inauspicious period.

Zooms to fresh high Meanwhile, domestic gold prices gained ₹2,400 per 10 grams on Monday to hit another new high of ₹112,155 per 10 grams against ₹109,775 logged on Friday, according to the Indian Bullion and Jewellers Association data.

On Monday, spot gold rose one per cent to $3,724 per ounce, after hitting a record high of $3,726 earlier in the day. US gold futures for December delivery climbed 1.4 per cent to $3,758 an ounce.

Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services said gold hovered near a record high on the back of surge in geo-political tensions and also as investors braced for a slew of speeches from US Federal Reserve officials and inflation data this week, after the central bank cut interest rates last week and signalled potential further easing.

Investors are broadly expecting two more rate cuts of 25 bps each in October and December with the probabilities of 93 per cent and 81 per cent respectively, he said.

Global developments

Colin Shah, MD, Kama Jewelry, said the recent gold price surge to above ₹1.10 lakh per 10 grams in domestic futures, has been mostly propelled by international reasons like geopolitical tensions, trade turmoil, the effect of American tariffs, and poor labour market indicators in the US that led to the Fed rate reduction.

“Whereas such sharp increases have dampened conventional retail consumption in the near term, we are of the view that festival and wedding season will restore demand in India. Cultural and emotive value means that gold buying remains a priority at auspicious moments,” he said.

Consumers are now moving towards lightweight jewellery ranging between 14K to 18K on grounds of affordability, and the shift in perception among the young generation towards gold as a prestige value rather than an investment. On the other hand, heavy traditional jewellery will continue to witness it seasonal shifts in demand during the festive and wedding season, he said.

Shah said gold coins and bars still attract investors. Despite high prices, the sentimental value and strong appetite of Indian consumers along with innovative designs by jewellers will sustain steady sales for the industry, he said.

Renisha Chainani, Head of Research at Augmont, said gold October Futures have broken out above $3,730 (₹1,10,500) and the next target would be $3,800 (₹1,13,500). “If prices top out and fall below $3,660 (₹1,08,700), then only we could see further profit booking.

Source: https://www.thehindubusinessline.com/