- The domestic gold price increased by 3.3% in June m-o-m and is 24% higher than at the end of 2019
- Economic activity improved as lockdown eased to some extent
- Jewellery demand improved further in the month but failed to recover completely due to recurring lockdowns, lower number of weddings and lack of auspicious days in the month
- Bullish gold price momentum and safe-haven demand lured investors towards gold ETFs. Total holdings for Indian gold ETFs reached to 24t in June
- The Reserve Bank of India (RBI) added 22.7t of gold to its reserves between February and May 2020
- Monsoon is 18% above Long Period Average (LPA) rainfall with Kharif sowing almost double compared to the last year- normal monsoon and healthy sowing bodes well for rural gold demand in Q4 2020.
Economic activity improved as lockdown eased to some extent in June
The Ministry of Home Affairs announced phase-wise resumption of economic activities outside COVID-19 containment zones.1 Following this, domestic economic activity improved in the month. India’s top two-wheeler manufacturers, Hero MotoCorp and Bajaj Auto, reported y-o-y falls in domestic two-wheeler sales of 27% and 26% respectively during the month- lower than 83% and 81% decline in the month of May. With the easing of the restrictions and re-opening of the economy, unemployment rate fell to 8.7% by end of June from a high of 27.1% in the first week of May. (Chart 1).