- Indian gold imports were 62t in June 2019 – up slightly on the same month last year
- The domestic gold price was 6.1% higher in June as compared to end of May
- With higher domestic gold prices, the local discount in the gold market reached $23/oz (1.6% to the international price) by end of June
- Higher and relatively volatile prices encouraged gold futures trading on MCX: volumes touched a high of 28.2t in June
Consumer demand tailed off
Indian gold demand tapered off after the monsoon1 started on the 1st June and weakened further after the local gold price spiked with the sharp rally in the US dollar price. Once the domestic gold price breached Rs 33,500/10gm level on 20 June, retail demand fizzled out. The domestic economic environment also had a dampening effect, with indicators such as IIP and domestic car/motorcycle sales pointing towards a slowing economy. Consumers also held up purchases in June in the erroneous hope that a cut in customs duty would be announced in the Budget on 5 July. The retail demand however received some support from the ongoing wedding season till end of June.
After healthy imports in April and May, the drop off in retail demand in June meant the wholesale market was relatively muted. As the gold price spiked towards the end of the month, the domestic market reached a discount of $23/oz by end of June – the biggest discount since August 2016 (Chart 1).