- The domestic gold price increased by 2.6% in May m-o-m and is 19.6% higher than at the end of 2019
- The Indian economy remained fragile and the stock market fell in May
- Jewellery demand improved in southern India but remained weak elsewhere
- A rising gold price, higher volatility in the equity market and safe-haven demand lured investors towards gold ETFs. Net inflows into gold ETFs in May were Rs 8.15bn, compared with Rs 7.3bn during April
- The Reserve Bank of India (RBI) added 19.9t of gold to its reserves between February and April 2020.
Economy remained fragile and stock market fell in May
Domestic economic activity has been impacted severely by the nationwide lockdown, which began on 25 March. High frequency indicators point to a collapse in consumer demand since March 2020 across both urban and rural segments. India’s largest carmaker, Maruti Suzuki, reported an 86% y-o-y fall in domestic car sales in May. Similarly, India’s top two-wheeler manufacturers, Hero MotoCorp and Bajaj Auto, reported y-o-y falls in domestic two-wheeler sales of 83% and 81% respectively during the month.1 As per the RBI Survey, the Consumer Confidence Index fell to an historic low of 63.7 in May from 85.6 in March and the one-year ahead confidence index also recorded a sharp fall.2 (Chart 1).