India Gold Market Recovery Gains Pace as Demand and Imports Rise

SEATTLE (Scrap Monster): India’s gold market is showing signs of recovery after the sharp price correction seen in June, according to a recent report published by the World Gold Council (WGC). The jewellery demand and gold imports have witnessed significant improvement during recent weeks, it noted.

International gold prices climbed 9% during the first half of August to around $4,391 an ounce, while domestic prices increased nearly 7% to INR 151,744 per 10 grams. The recovery was supported by changing expectations for monetary policy, a weaker US dollar, and continued investment in gold-backed exchange-traded funds (ETFs).

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Jewellery demand has improved as consumers took advantage of relatively stable gold prices. Retailers and manufacturers have started rebuilding inventories ahead of the festive season. Also, the exchange of old jewellery for new gold continues to be an important source of supply.

Investment demand continues to provide support. Indian gold ETFs recorded net inflows of INR 1,560 crore in July, taking total holdings to about 120 tonnes.

Gold futures activity also strengthened in July, with average daily MCX volumes rising to 14.9 tonnes. Meanwhile, gold imports more than doubled in value to $4.16 billion from $1.97 billion in June. The improving demand picture points to a potentially stronger festive season, the WGC report noted.

Looking forward, investment demand is likely to lend support to the market, though high gold prices are feared to limit jewellery purchases.