Gold premiums in India jumped this week to their highest in more than a decade, as investors rushed to buy the metal on expectations of an import duty hike in the upcoming budget, while China premiums dipped as international spot gold prices neared the historic $5 000 per ounce mark.

Bullion dealers charged a premium of up to $112 per ounce over official domestic gold prices – inclusive of 6% import and 3% sales levies – the highest since May 2014. Last week, dealers offered a discount of up to $12.

"Demand was really strong this week and ran ahead of supply. With a duty hike expected in the budget, investors jumped in and bought aggressively," said Chanda Venkatesh, managing director of Hyderabad-based bullion merchant CapsGold.

Indian Finance Minister Nirmala Sitharaman is set to present the union budget for 2026/27 on February 1. She had slashed import duties on gold and silver to 6% from 15% in July 2024.

"Jewellery demand is very weak. Investment buying might also have slowed with prices at record highs, but expectations of a duty hike have made gold more attractive," said a Mumbai-based bullion dealer with a private bank.

Domestic gold prices MAUc1 hit a record high 159,226 rupees per 10 grams on Friday.

In top consumer China, bullion traded at premiums of up to $8 an ounce above the global benchmark spot price this week, up from last week's discount of $12 to $3 premium.

"Physical demand (in China) is actually a little bit thin, but that's a good sign for the physical markets given record prices as a lot of investors, retail and wealth clients alike are looking to get their hands on physical precious metals even if it has been in smaller quantities of 100g to 500 gram bars," said Peter Fung, head of dealing at Wing Fung Precious Metals.

People are going for gold bars and coins as premiums are higher on gold jewellery sales, Fung added.

In Singapore, gold was sold at prices ranging from a $0.50 discount to premiums of up to $2 an ounce.

In Hong Kong, gold  traded at par to premiums of $1.70, while in Japan, bullion was sold at discounts of $6 to a $1 premium, same as last week.

International spot gold prices notched another record high on Friday, powered by geopolitical tensions and economic uncertainty.