Gold prices staged a strong recovery on Friday after falling to their lowest level in more than three months earlier this week. While the rebound has lifted market sentiment, buying patterns remain sharply different in the world's two biggest gold-consuming countries. Demand in India has slowed due to seasonal factors and price volatility, whereas China is witnessing renewed interest in physical gold purchases.

On July 3, gold futures on the Multi Commodity Exchange (MCX) climbed to an intraday high of ₹1,48,069 per 10 grams. At the same time, international bullion prices moved toward their first weekly gain in five weeks, supported by weaker-than-expected US employment data that strengthened hopes of interest rate cuts.

Gold Recovers After Touching Multi-Month Low

Earlier this week, domestic gold prices slipped to around ₹1,40,450 per 10 grams, marking their lowest level since March 27. The decline followed a weak performance throughout June, when gold prices dropped by nearly 8.4%, recording the first monthly decline since March.

The latest rebound has helped restore investor confidence, but retail buying has not increased significantly. Many consumers are waiting for prices to stabilize before making fresh purchases, especially after witnessing sharp swings in the bullion market over recent weeks.

Why Gold Demand Has Softened in India

According to jewellery industry participants, India has entered a period of relatively weak seasonal demand.

With no major festivals or wedding celebrations scheduled in the immediate future, jewellery purchases have naturally slowed. Higher prices following the recent recovery have also made many buyers cautious, encouraging them to postpone large purchases until there is greater clarity on market direction.

Jewellers say wholesale buying is continuing at a controlled pace to maintain inventory, but retailers remain careful because frequent price fluctuations make demand difficult to predict.

The slowdown does not necessarily indicate a long-term decline in gold consumption. Instead, it reflects the typical off-season combined with uncertainty over future price movements.

China Sees Stronger Physical Gold Buying

While Indian consumers are adopting a wait-and-watch approach, the situation in China appears to be improving.

Market data shows that discounts on physical gold in China have narrowed considerably during the current week. Gold has been trading at prices ranging from international parity to around $2 per ounce below global benchmark prices.

In comparison, discounts were between $3 and $7 per ounce only a week ago.

Analysts consider narrowing discounts an important indicator of stronger demand. When buyers become more active, sellers no longer need to offer deep discounts to attract customers. This suggests that physical gold consumption in China is gradually recovering after a period of slower activity.

Global Gold Prices Supported by US Economic Data

International bullion prices are also receiving support from changing expectations surrounding US monetary policy.

Spot gold was trading near $4,184.75 per ounce, while August US gold futures were quoted around $4,197.20 per ounce.

The recent gains followed weaker-than-expected employment figures released in the United States. According to the US Bureau of Labor Statistics, the American economy added approximately 57,000 non-farm payroll jobs in June, a figure that fell short of market expectations.

The softer labour market data has reduced concerns that the US Federal Reserve may continue raising benchmark interest rates aggressively. Investors now expect a more accommodative policy stance, which has increased demand for safe-haven assets such as gold.

Gold generally benefits when expectations for higher interest rates decline because the opportunity cost of holding the non-yielding asset becomes lower.

What Investors Should Watch Next

Market experts believe gold prices will continue to respond to key global developments, including inflation data, central bank decisions, geopolitical tensions, and economic indicators from major economies.

In India, attention will remain focused on whether festive and wedding season demand revives in the coming months. A sustained recovery in consumer buying could provide additional support to domestic prices.

Meanwhile, China's improving physical demand may help strengthen global bullion prices if the current trend continues. Investors are also closely monitoring signals from the US Federal Reserve, as any indication of future interest rate cuts could further influence gold's direction.

For now, the gold market remains balanced between cautious buying in India, improving demand in China, and supportive international factors that continue to shape price movements across global markets.