- The domestic gold price ended 4.8% higher in October at Rs47,794/10g1
- Retail demand strengthened in the month with festival and wedding purchases
- Official imports were flat m-o-m as stocks remained ample and the average local market premium traded at flat
- Indian gold ETFs saw 0.3t of net inflows amid festive demand. Total holdings of gold ETFs increased to 35.4t by the end of October
- The Reserve Bank of India (RBI) added 3.7t of gold in October, increasing its total gold reserves to 747.6t.
- Retail demand remained robust in the first two weeks of November with retailers reporting volume sales on Dhanteras exceeding the pre-pandemic levels of 2019.2 From the third week of November retail demand appears to be weakening; this follows robust purchases during Dhanteras and a rising gold price
- We anticipate that official imports may remain flat or lower in November. The higher gold price, together with sufficient imports in the previous three months, may dissuade trade from increasing imports.
Gold price rallied, local price remained flat
Gold prices rallied during October on higher inflation expectations, rising net long positioning on COMEX and a soft dollar. During the month the LBMA Gold Price AM in USD and the MCX Gold Spot in INR rose by 3.8% and 4.8% respectively.3 The relative stronger INR gold price performance could largely be attributed to a depreciating INR, which fell by 1% over the month.
The average local premium remained flat at US$0.4/oz in the month, US$0.9/oz lower m-o-m. The domestic market remained in an average premium of US$1.3/oz in the first two weeks of the month but flipped back to an average discount of US$0.9/oz in the last two weeks as bullion offtake fell with the sudden increase in the gold price (Chart 1).4
Chart 1: The local gold price premium remained flat
Difference between MCX Spot Gold price and landed gold price in India derived from LBMA Gold Price AM