Gold prices in India have regained momentum: World Gold Council
New Delhi, Aug 20: Gold prices in India have regained momentum after correcting in June and remaining broadly stable in July, according to the World Gold Council’s latest gold market update regarding the country.
International gold prices increased 9 per cent in the first two weeks of August to USD 4,391 per ounce, while domestic prices in India rose nearly 7 per cent to Rs 151,744 for 10 grams as of 14 August.
Physical demand has started to improve alongside the recovery in gold prices, with jewellery purchases showing signs of strengthening.
Consumers have been using recent price movements as an opportunity to buy, while purchases that had been deferred earlier have also begun returning to the market.
The improvement is also visible in the supply chain, with manufacturers reporting higher order flows.
Jewellers have increased inventory ahead of the festive season, indicating expectations of stronger consumer demand in the coming weeks.
Investment demand has continued to support the gold market, although it moderated from the high levels seen earlier in the year.
Indian gold exchange-traded funds (ETFs) recorded net inflows of Rs 1,560 crore in July, down 55 per cent from the previous month.
Despite the moderation, ETF holdings increased by 1 tonne to 120 tonne, while assets under management rose 2 per cent to Rs 1.73 trillion.
Gold ETFs attracted an estimated Rs 1,179 crore in additional net inflows during the first two weeks of August.
Gold futures trading also strengthened in July.
Average daily volumes on the Multi Commodity Exchange of India increased to 14.9 tonnes from 13.5 tonnes during the previous three months, while average daily turnover rose 9 per cent month-on-month to Rs 21,400 crore.
Gold imports provided another indication of improving market conditions.
Import value more than doubled in July to USD 4.16 billion from USD 1.97 billion in June, while estimated import volumes rose to 40–45 tonnes from around 20 tonnes.
The World Gold Council attributed the increase to stronger physical demand and inventory replenishment by manufacturers and retailers ahead of the festive season.
The rise in imports, alongside higher jewellery orders and continued investment flows, suggests that gold demand could strengthen further as the festive period approaches.
The recovery in gold prices has been supported by changing monetary policy expectations, a weaker US dollar and renewed inflows into gold ETFs. (BVI)
