Recent trends in the global gold market have seen a slowdown in demand from two of its largest consumers, India and China, as escalating prices discourage potential buyers. In India, the world's second-largest gold consumer and a significant importer, the appetite for physical gold has waned amidst soaring prices, prompting dealers to offer discounts for nine consecutive weeks. This dampened demand comes as buyers anticipate potential relief in the form of an import duty reduction, expected to be addressed in the upcoming budget.

As of Friday, domestic gold prices in India hovered around 72,600 rupees per 10 grams, having peaked at a record high of 74,442 rupees back in May. "Every year before the budget, jewellers speculate about possible duty cuts and avoid making purchases. This year is no exception," noted a Kolkata-based dealer, reflecting the cautious sentiment prevailing in the market.

Dealers in India have been offering discounts of up to $11 per ounce over official domestic prices, which include import and sales levies. This marks a slight increase from the previous week's discounts of $9 per ounce. "Elevated prices have dampened retail demand across the country. In rural areas, farmers are busy with crop sowing activities as rainfall has picked up," added a Mumbai-based dealer from a private bullion importing bank, underscoring the broader economic factors influencing consumer behavior.

Similarly, in China, another key player in the global gold market, demand has shown signs of weakness. Dealers reported premiums of $11 to $24 per ounce over international spot prices, compared to $12 to $23 per ounce the previous week. "Gold activity in China continues to highlight weakness in retail and wholesale demand, judging by latest data, as high prices weigh on it," remarked Hugo Pascal, a precious metals trader at InProved.

Meanwhile, in Southeast Asia, gold prices remained steady with Singapore and Hong Kong reporting minimal premiums. Vincent Tie, sales manager at Singapore dealer Silver Bullion, noted a shift in customer interest towards silver bars and coins amidst the higher gold prices. In Japan, bullion prices held firm, trading at par to a $0.50 premium.

The current market dynamics underscore a cautious approach among buyers and dealers alike, influenced by both economic conditions and anticipations of policy changes that could impact gold prices and demand in the near term.