Despite a slight pullback in the price of gold, demand during the May Day holiday period in China has been lackluster, leading to a consecutive second-week decline in gold premiums. Meanwhile, another major gold consumer, India, has also experienced subdued demand for physical gold as buyers await further price drops.
After rebounding to historic highs in recent months, the price of gold saw a slight decline last week. The current spot price of gold is $2,302.76 per ounce.
In India, the world’s second-largest consumer and a major importer of gold, domestic prices have fallen to around 70,500 rupees per 10 grams this week, following the historic high of 73,958 rupees per 10 grams reached last month.
Ashok Jain, the owner of Mumbai gold wholesaler Chenaji Narsinghji, told Reuters, “Despite the falling prices, the demand has not improved. Buyers have paused their purchases. Considering the significant price increases over the past two months, they believe prices might drop significantly.”
Prices charged by Indian dealers are $1 higher per ounce than the official domestic prices, including a 15% import tax and a 3% sales tax, with last week’s premium standing at $5.
India will celebrate Akshaya Tritiya, the second-largest gold buying day in the country after Dhanteras, on May 10. A Mumbai gold and silver trader from a private bank mentioned, “If prices remain at this level or further decrease, we may see good demand during the festival period.”
In China, dealers are charging premiums of $18 to $20 per ounce, lower than the previous week’s $20 to $35 premium.
Bernard Sin, the Greater China Director of MKS PAMP, stated that during the May 1-3 period, the Chinese market was closed for Labor Day holiday, resulting in a lack of pre-holiday spending and a decrease in gold consumption.
Prior to this, there was a gold rush during the Chinese New Year period in many places.
On the first day of the May Day holiday “Golden Week,” rail and car travel surged across China, but amidst challenges in economic recovery, consumers remain cautious with their spending.
Since the end of 2022 when the Chinese Communist Party lifted extreme virus containment measures, although there has been a rebound in travel, consumer spending has not kept pace, limiting the overall economic uplift.
The Chinese government has set a target of around 5% economic growth for 2024. Many analysts argue that achieving this goal would be challenging without further stimulus measures.
A survey on Tuesday indicated that the pace of expansion in both manufacturing and service sector activities in China slowed in April, signaling weakened momentum.
Furthermore, the recent rise in gold prices has triggered a craze for purchasing 24K gold (999 gold) in China, but this has also led to a surge in gold fraud cases. Reports of gold scams on local media and consumer protection websites continue, such as on Heimao Tousu (a third-party consumer service platform under Sina).
CNBC analysis suggests that counterfeit goods are not new in China. This “economic powerhouse” leads the world in counterfeited and pirated products, driven by both unsuspecting buyers and those actively seeking counterfeits.
Shaun Rein of the China Market Research Group mentioned that counterfeit goods abound on Chinese e-commerce platforms, with everything from gold to knockoff Chanel handbags readily available.
In Japan, traders are selling gold at a premium of 0.5-0.75 dollars, slightly lower than last week’s range. Despite the yen weakening and high gold prices, traders in Japan note a reasonable number of customers buying gold during the Golden Week holiday period from April 29 to May 5.