A pickup in China’s gold buying is expected to largely compensate for weak Indian demand. Above, an Indian goldsmith makes gold jewelry at a workshop in Siliguri in August.
Diptendu Dutta/Agence France-Presse/Getty Images

HONG KONG—Gold buying in India and China, which together account for half the world’s gold demand, is set on divergent paths at the start of a normally crucial period for retail sales of the yellow metal.

Indian and Chinese consumers typically both flock to gold sellers around this time of year. A succession of national holidays in early October in China kicks off several months of gold buying there that culminates around Chinese New Year. October also sees the beginning of India’s Hindu festival season, when many people consider it auspicious to buy the precious metal.

Yet this year, Indian gold prices are quoted at a discount of $2 to $4 a troy ounce to international prices. Conversely, gold has been trading at a premium of $2 to $5 an ounce in China since September, say traders and analysts.

The pickup in China’s buying is expected to largely compensate for the weak Indian demand, in turn meaning Asian demand should help support gold prices near term, analysts say. Gold prices are hovering around $1,166 an ounce, just below a near four-month intraday high of $1,191.60 an ounce hit on Oct. 15.

Chinese purchases of gold have been unusually strong in part because investors have been looking for a stable home for their money following the recent turbulence in the country’s stock markets.

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