- The domestic gold price ended the month 29.6% higher y-t-d at Rs50,645/10g1
- The economic recovery gained momentum in October but concerns remained over its sustainability
- Retail gold demand improved in October due to a lower gold price and Navratri sales but demand was lower y-o-y due to the higher gold price and impact on incomes due to COVID-192
- Demand for safe-haven assets and strong y-t-d performance (+29.6%) supported gold ETF flows. Total holdings for Indian gold ETFs reached 27.6t by the end of October; a net inflow of 0.7t during the month
- The Reserve Bank of India (RBI) added 35.1t of gold y-t-d in 2020.
Economic recovery momentum strengthened
Daily new COVID-19 cases averaged ~62,000 during the month, down from ~87,000 in September. With lower daily infections lockdown restrictions were eased throughout India, helping the economy recover (Chart 1).
As restrictions eased, pent-up demand was released and several high frequency indicators started to show a recovery in economic activity:
- India’s manufacturing purchasing managers’ index (PMI) rose to 58.9, its highest level since January 2012, due to a sharp pick-up in manufacturing to meet the backlog and fulfil new orders
- Power demand was 12.1% higher y-o-y
- Railway tonnage movement was 15.2% higher y-o-y
- Retail sales of tractors improved – 55.5% higher y-o-y
- Average daily E-Way bills generated rose – 17.4% higher y-o-y3