- The domestic gold price ended 5.1% higher in May at Rs48,993/10g1
- Retail demand collapsed amid COVID-induced lockdowns in the country
- Indian official imports slowed and the local market flipped to discount
- Monthly inflows into gold ETFs slowed as higher returns lured investors towards the equity market. Total holdings for Indian gold-backed ETFs (gold ETFs) reached 33.2t by the end of May; a net inflow of 0.1t (Rs2.9 bn; US$39mn)
- The Reserve Bank of India (RBI) added 0.9t of gold to its reserves in the month increasing its total gold reserves to 696.2t.
Gold prices rose in May for the second consecutive month. A fall in the real rates, along with momentum and a weakening dollar, lifted the USD gold price. But with the INR appreciating by 2.1% against the USD, the upside to the local gold price was curtailed. As a consequence, the LBMA Gold Price AM in USD and MCX Gold Spot in INR rose by 7% and 5.1%, respectively, during the month (Chart 1).2
Chart 1: Gold prices rose in May for the second consecutive month
Domestic gold price in rupees vs LBMA Gold Price AM in US dollars