Asia's Gold Divide: Why China's Appetite Outshines India's Slump Amid Rising Tensions

The gold markets of India and China are diverging sharply, creating a stark contrast in investment opportunities. While India grapples with a demand slump due to soaring prices and a weakening rupee, China's appetite for gold remains robust, fueled by safe-haven demand and strategic central bank purchases. This article breaks down the dynamics and argues for a bold pivot toward China-linked gold assets while cautioning against Indian physical gold until prices stabilize.

India's Gold Market: Stuck in a Price Squeeze

India's gold prices hit record highs in June 2025, with 24K gold trading at ₹10,108 per gram in Mumbai. This surge is driven by a 15% import duty, a weakening rupee (which rose gold's USD-linked costs), and geopolitical risks. The rupee's decline against the dollar has made imports prohibitively expensive, amplifying the pain for jewelers and consumers alike.

The coming festivals—Dhanteras and Diwali—typically boost demand, but current prices are deterring buyers. Analysts warn of a potential demand collapse unless prices correct sharply by September.

Investment Takeaway for India:
Avoid physical gold purchases until prices drop to ₹9,500–₹9,800/gram pre-festivals. For now, steer clear of ETFs like GOLDSHARE until volatility settles.

China's Gold Market: A Safe-Haven Powerhouse

China's gold prices remain steady despite rising costs, with 24K gold at ¥767.70 per gram (CNY) as of June 19. The key driver? Geopolitical risk and central bank buying. Beijing's push to diversify reserves away from the U.S. dollar—amid trade wars and sanctions threats—has made gold a strategic asset.

Central banks added 1,136 tonnes of gold in 2022 alone, with China accounting for a significant chunk. Even as prices climb, domestic buyers see gold as a hedge against inflation and yuan volatility.

Retail demand also remains strong, with investors snapping up Shanghai Gold Exchange (SGE) bars and Chinese Gold Panda coins.

Investment Takeaway for China:
Load up on gold ETFs like SGOL or miners such as Zijin Mining (03883.HK) and Polyus (PLZLF). These assets are primed to benefit from sustained demand and geopolitical tailwinds.

Contrasting the Two Markets: Why China Wins

Factor	India	China
Price Drivers	Rupee weakness, import duties	Central bank buying, geopolitical
Near-Term Demand	Slump until price correction	Steady growth driven by safety
ETF Performance	GOLDSHARE down 12% YTD (June 2025)	SGOL up 8% YTD, tracking physical demand
Central Bank Role	Passive observer	Aggressive buyer, 72.96M oz reserves

Action Alert: Position for China's Gold Surge

1. Buy China's Gold ETFs:
2. SGOL (VanEck Gold Miners ETF): Tracks global miners but has a China tilt.

3. CNY Gold ETFs: Direct exposure to yuan-denominated gold via SGE-linked funds.

4. Go Long on Miners with China Exposure:

5. Zijin Mining: China's largest gold producer, benefiting from domestic demand.

6. Polyus: A Russian miner with low-cost production, a favorite of Asian investors.

7. Avoid Indian Gold Until Festivals:

8. Wait for prices to drop to ₹9,500–₹9,800/gram before buying physical gold or ETFs.

Conclusion: Asia's Gold Divide is Here to Stay

India's gold market is in a holding pattern, shackled by its economic vulnerabilities. China, meanwhile, is using gold as a weapon in its financial sovereignty battle. Investors ignoring this divergence risk missing out on one of the decade's best opportunities.

Final Call:
Buy Chinese gold assets now. Hold off on Indian gold until September. This is a must-watch sector—don't let your portfolio get stuck in India's slump when China's gold rush is just heating up.