Gold discounts in India have surged to their highest levels in more than six months as a sustained price rally significantly dampened retail buying interest. The development comes as domestic gold prices hit unprecedented levels, with dealers struggling to attract buyers despite the ongoing festive season.

Record Price Levels Deter Indian Buyers

Domestic gold prices reached an all-time high of ₹139,286 ($1,550.34) per 10 grams on Friday, tracking the rally in international spot gold rates. The surge follows spot gold's climb to a record $4,530.60 per ounce, driven by speculative buying, momentum-driven investments, expectations of additional US rate cuts, and rising geopolitical tensions.

A Kolkata-based jeweller explained the market sentiment: "People are in a festive mood and travelling, so they are not interested in making purchases at these record-high price levels."

Discount Structure Reflects Weak Demand

The impact on retail demand is clearly visible in the discount structure offered by Indian dealers:

These discounts are calculated over official domestic prices and include the mandatory 6% import and 3% sales levies. A Mumbai-based bullion dealer with a private bank noted: "The slowdown in demand is deepening as prices continue to rise. Demand is likely to remain muted over the next few weeks unless there is a significant correction in prices."

Chinese Market Shows Contrasting Trends

In contrast to India's widening discounts, China's bullion market experienced a sharp narrowing of discounts despite similarly muted retail demand. Chinese gold traded at discounts of $15 to $30 per ounce to the global benchmark spot price, a significant improvement from last week's discounts of up to $64 per ounce—the deepest in more than five years.

Bernard Sin, regional director for Greater China at MKS PAMP, attributed the discount narrowing to several factors despite weak retail demand:

• Increased speculative buying at record-high prices
• Expectations of US rate cuts
• Constrained supply due to lack of new import quotas from the People's Bank of China
• Support from a firmer yuan

For historical context, Chinese discounts had reached a record high of $87.50 in August 2020 during the COVID-19 pandemic-induced retail demand slump.

Regional Market Dynamics

Across other Asian markets, gold trading patterns varied significantly:

Vergel Villasoto, director at Silver Bullion in Singapore, observed a shift in investor preferences: "The major purchases are made on silver and platinum, not gold. As usual, once we see the run-up in gold, that's when buy orders come in due to 'FOMO'" (fear of missing out).

The current market dynamics highlight the price sensitivity of retail gold demand in India, where traditional buying patterns during festive seasons are being disrupted by record-high price levels. The contrasting trends between Indian and Chinese markets underscore the different factors influencing regional gold trading, from retail sentiment to speculative activity and supply constraints.

Euro Pacific Asset Management's Chief Economist and Global Strategist Peter Schiff has issued a stark warning about the future of global currency dynamics, predicting that gold will replace the US dollar as the primary central bank reserve asset. Schiff, who also serves as Chairman of SchiffGold.com, believes this transition will end the dollar's hegemony and trigger what he describes as a "historic economic collapse."

Schiff's Bold Prediction

"King dollar's reign is coming to an end. Gold will take the throne as the primary central bank reserve asset. That means the US dollar will crash against other fiat currencies, and America's free ride on the global gravy train will end. Prepare for a historic economic collapse," Schiff stated in a recent tweet. The economist, known as a strong proponent of precious metals, also noted that investors who previously avoided buying gold while expecting price declines are now accepting that the current rally appears sustainable.

Gold's Historic Performance

Schiff's comments coincided with gold's breakthrough performance, as the precious metal breached the $4,500.00 mark for the first time in history. Current market data shows the following price movements:

The remarkable performance has been attributed to multiple factors including safe-haven demand, increased buying by central banks, and rupee weakness affecting domestic markets.

World Gold Council's Assessment

The World Gold Council has characterized 2025 as delivering gold's best-ever returns, describing the rally as "remarkable." The organization reported that gold achieved over 50 all-time highs during the year as of December 4. Looking ahead to 2026, the WGC suggests that gold's future performance will largely depend on ongoing geo-economic uncertainty and macroeconomic conditions.

Market Outlook and Scenarios

The World Gold Council outlined several potential scenarios for gold's performance in 2026. If current macroeconomic conditions persist, gold prices may remain rangebound, reflecting consensus expectations. However, the organization anticipates continued market surprises similar to those witnessed this year. In scenarios where economic growth slows and interest rates decline further, gold could experience moderate gains. Conversely, successful implementation of policies by the Trump administration could accelerate economic growth and reduce geopolitical risks, potentially leading to higher interest rates, a stronger US dollar, and downward pressure on gold prices.