Domestic gold prices leveled off throughout July before climbing to two-month highs in early August. While international prices rose 9% in the first two weeks of the month, the appreciation of the Indian rupee against the U.S. dollar dampened the impact locally, keeping domestic prices near INR151,744 per 10 grams. Market feedback indicates that the practice of trading in old gold for new jewelry has provided a steady supply, keeping local prices at a discount to landed costs, even as those discounts narrowed from their mid-May peaks.
Indian Gold Market Rebounds as Festive Season Demand Stirs
Indian gold jewelry demand is gathering momentum as consumers capitalize on price stabilization ahead of the upcoming festival season. According to the World Gold Council, a surge in inventory replenishment by retailers and a notable recovery in import volumes signal a shift in market sentiment after a subdued second quarter.
Investment activity remains resilient, with Indian gold ETFs recording net inflows of INR15.6 billion in July. Retail participation also expanded, with 57,000 new investor accounts added during the month. On the Multi Commodity Exchange of India, trading volumes grew to an average of 14.9 tonnes per day, reflecting increased hedging and trader activity as the market stabilizes. This renewed interest is further evidenced by a sharp rise in imports, which doubled to approximately US$4.16 billion in July as manufacturers prepare for heightened seasonal consumption.
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