China keeps buying physical gold through the price dip while India's silver market tightens to the point that local buyers pay close to $80 an ounce. Gold and silver both ended the week lower, yet Asian physical demand and structural silver deficits still frame the longer-term picture.
Gold and silver closed the week lower after renewed reports of a breakdown in the U.S.-Iran ceasefire weighed on sentiment. Silver spot settled at $59.89 per ounce, gold finished at $4,120 per ounce, and the gold-to-silver ratio ended at 68:1.
China buys the dip in gold
China's appetite for physical gold strengthened through the correction rather than fading with it. The country has imported nearly 700 metric tons of gold through May 2026, with import figures ramping higher as prices sold off.
Official buying kept pace with private demand. The People's Bank of China added nearly 15 tons of gold in May 2026, its 20th consecutive month of purchases. Domestic investors leaned the same way, and assets in Chinese gold ETFs have expanded from roughly $4 billion to $40 billion in less than three years, treating the metal as a long-term store of value.
A split between East and West
The gap between Eastern and Western silver markets stayed wide. Chinese silver continued trading at premiums above 10% over Western benchmarks, while heavy Western silver ETF selling over the past 100 days fed additional metal into COMEX and London inventories.
India sits at the opposite extreme. After the country raised gold and silver import duties from 6% to more than 15%, local inventories dried up and premiums climbed to roughly $6 per ounce, pushing Indian buyers close to $80 per ounce for silver. Analysts describe the move as a supply bottleneck rather than a surge in seasonal demand, with festival and wedding season still ahead.
Structural deficits underpin the case
Longer-term fundamentals stayed supportive despite the weekly slide. The Silver Institute's World Silver Survey expects 2026 to mark the sixth consecutive annual silver market deficit, as demand from solar, electric vehicles, artificial intelligence, data centers, and electronics outpaces mine supply. With persistent Asian physical demand, ongoing central bank gold accumulation, and structural silver deficits, those longer-term trends continue to provide a backdrop for precious metals investors beyond this week's geopolitical headlines.
Sources: SD Bullion, Reuters
Trading involves risk.
Risk Disclaimer
