The World Gold Council (WGC) has recently released an update on India’s gold market, indicating a period of subdued demand following a surge in purchases during the festival season. Despite this lull, the gold market in India remains robust, with significant movements in prices, imports, and investor activity.
Global and domestic gold prices have shown remarkable resilience, with a 12 percent increase year-to-date. International gold prices reached an all-time high in mid-May, settling at USD 2,343 per ounce. The prices slightly adjusted to USD 2,317 per ounce in early June due to a stronger-than-expected jobs report in the US and a pause in gold purchases by the People’s Bank of China.
In India, the demand for gold peaked during the Akshaya Tritiya festival on 10 May, a traditionally auspicious day for buying gold. However, the momentum quickly waned after the festival, with a drop in demand exacerbated by record-high gold prices in mid-May. Jewelry demand is expected to remain low until the next festival season in the latter part of Q3.
Despite the post-festival slowdown, the domestic gold price discount to the international price has narrowed significantly, indicating ongoing interest in gold purchases in certain market segments. Additionally, Indian gold ETFs saw positive inflows in May, reversing the negative trend from the previous month.
The Reserve Bank of India (RBI) has been actively participating in the gold market, adding 30.6 tonnes of gold to its reserves in 2024, bringing its total gold holdings to a record high of 834.2 tonnes. The RBI’s consistent purchases have positioned it as one of the leading central bank buyers of gold globally this year.
Overall, while there was a temporary slowdown in demand following the festival rush, India’s gold market remains buoyant with positive indicators pointing towards sustained interest and growth in the coming months.
