India’s Gold Market Shifts as Seasonal Demand Outpaces Imports

According to Kavita Chacko, Research Head for India at the World Gold Council, the sharp 8.5% drop in global gold prices during September served as a catalyst for local activity. The resulting price correction encouraged retail buyers to restock ahead of major celebrations, narrowing domestic price discounts from $66 per ounce in September to just $8 by mid-October. This shift highlights a resilient consumer base, with jewelry retailers reporting double-digit revenue growth despite the volatility seen earlier in the year.

Financial participation in gold has mirrored this trend. Indian gold ETFs recorded their highest net inflows in seven months during September, reaching INR44.5bn. This influx was accompanied by a significant spike in new investor accounts, suggesting that the recent price dip was viewed as a prime entry point for long-term diversification. Meanwhile, the digital gold sector continues to see explosive growth, with purchase volumes reaching 18% above their long-term monthly average.

Contrasting this retail enthusiasm, institutional caution remains visible. Mutual funds have temporarily suspended new subscriptions into gold savings and funds of funds, a move likely coordinated with regulators to temper gold imports. This reduction in official import reliance is further supported by a robust old-gold exchange market, which now accounts for over half of sales for many major retailers, effectively cooling the need for foreign bullion even as the festive season hits its peak.