India’s Gold Demand Picks Up As Jewellery Buying, Investment Interest Improve Ahead Of Festive Season: WGC

New Delhi, Aug 20 (KNN) India’s gold market is showing signs of recovery, with jewellery demand, investment interest and imports improving ahead of the festive season, according to the World Gold Council’s (WGC) latest India Gold Market Update.

The council said physical demand has strengthened despite elevated gold prices, while investment demand has remained supportive. Consumers have returned to the market following a period of price stability, with some viewing recent price movements as an opportunity to make purchases, ANI reported.

Manufacturers have also reported higher order flows, while jewellers have increased inventory ahead of the festive season.

Gold Prices Rebound

Gold prices recovered after a sharp correction in June and a period of stability in July. International gold prices rose 9 per cent in the first two weeks of August to USD 4,391 per ounce, while domestic prices increased nearly 7 per cent to Rs 1,51,744 per 10 grams as of August 14.

The recovery was supported by changing expectations around monetary policy, a weaker US dollar and renewed inflows into gold exchange-traded funds (ETFs).

ETF and Futures Activity Improves

Investment demand remained positive, although ETF inflows moderated from the high levels recorded earlier in the year.

Indian gold ETFs attracted net inflows of Rs 1,560 crore in July, down 55 per cent from the previous month. ETF holdings increased by 1 tonne to 120 tonnes, while assets under management rose 2 per cent to Rs 1.73 lakh crore.

ETFs attracted an estimated additional Rs 1,179 crore in net inflows during the first two weeks of August.

Gold futures trading also gained momentum 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.

Imports Signal Stronger Physical Demand

Gold imports also pointed to an improvement in demand. Import value more than doubled in July to USD 4.16 billion from USD 1.97 billion in June, while estimated volumes increased 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.

While high prices could continue to influence jewellery purchases, the council expects investment demand and the seasonal improvement in jewellery buying to provide support to the domestic gold market in the coming months.

(KNN Bureau)