Kavita Chacko

The June–July period typically marks the off-season for gold in India, particularly for jewellery. A recovery in demand is anticipated with the onset of the festive and auspicious buying season from mid-August.

Stability in prices could prompt a resurgence in demand. Consumer sentiment that the downside to gold prices is limited would reinforce gold’s appeal as a reliable investment.

Seasonal and wedding related purchases may support gold demand this month and next. Investor interest is likely to strengthen as gold’s appeal as a safe-haven asset and portfolio diversifier heightens amid global economic uncertainties and financial market volatility.

Gold’s price momentum remains strong, breaching records, with domestic gold prices seeing gains of 13% y-t-d. Price rise dampens jewellery purchases, boosts old gold sales, while investment demand is sustained: gold ETFs saw healthy inflows in February, though below January’s peak.

Domestic prices track international highs, but demand pressure results in deeper discounts from local dealers. Price surge dims jewellery demand, while investment interest lingers.

Even with a price moderation in November and December, gold surpasses other key asset classes to lead returns in 2024. Jewellery demand slowed amid high prices and an inauspicious period on the Hindu calendar.

Jewellery demand weakens post-Diwali, while investment demand for gold bars and coins remains strong. Indian gold ETFs maintain strong inflows, adding 14.5t year-to-date.

Despite record-high prices Diwali gold demand was healthy, with strong sales driven by investment appeal. Indian gold ETFs continue to attract strong interest from investors, with October seeing the largest inflows on record. The Reserve Bank of India (RBI) has purchased 64t of gold to date this year, making it the second highest annual purchase on record. Uptick in gold imports in October.

The surge in demand from the import duty cut was tempered by fresh record-high prices and an inauspicious period in September according to the Hindu calendar. Domestic gold prices are currently at a slight discount over landed cost1 amid normalising demand. However, signs of festive buying are beginning to emerge. With an addition of 54.7t y-t-d,2  the Reserve Bank of India’s (RBI) gold reserves have grown by 7%. Increased interest in Indian gold ETFs; inflow momentum remains strong. Gold imports see moderation in imports after August surge.

Domestic gold price tracks the upward trend in international prices. Consumer demand stabilises but maintains strength; festive season momentum key. Premium of domestic gold prices over landed cost shrinks. The Reserve Bank of India (RBI) has added 50t to its gold reserves so far this year. Streak of fund inflows into Indian gold ETFs continues, with highest monthly inflows on record in August. Gold imports hit a new high in August

The reduction of gold’s import duty brought domestic gold prices lower 6% m/m, with y-t-d gains now at 10%. The lower import duty has also reportedly boosted consumer demand ahead of the festive season. In turn, strong demand pushed the domestic gold price to a premium relative to the landed price following five months of discounts. The Reserve Bank of India (RBI) continued with its consistent but measured approach to buying gold. Gold ETFs saw substantial inflows in July on the back of adjustments to the treatment of long-term capital gains. Gold imports also maintained their momentum in July. 

Gold import duty was cut by more than half. Long-term capital gains tax on gold has been adjusted down and the holding period decreased. Profits on gold ETFs and mutual funds will no longer be taxed at the short-term capital gains rate if held for at least 12 months. Despite some potential short-term disruptions, we expect the combined effects of these changes to add at least 50t to gold demand in H2 2024.

Global and domestic gold prices stay elevated, y-t-d gains at 16%. Jewellery demand subdued; investment demand dominant. Significant widening of discounts between domestic and international gold prices. The Reserve Bank of India (RBI) grows its gold reserves with its highest monthly purchase in nearly two years in June. Gold ETFs inflows sustain momentum in June. Steady trend in gold imports.

Gold rose to a new all-time high in mid-May before pulling back, likely on profit taking, to close the month at US$2,343/oz. This delivered a 1% monthly increase, adding to gains in March (9%) and April (5%).

International and domestic gold prices moderated from the April peaks but ended the month with gains following the notable price rise of March. After a weak March and April, there was resurgence in gold demand around the Akshaya Tritiya festival. Domestic gold prices continue to trade at a discount in relation to the international prices, but the discounts have narrowed from a month ago. Meanwhile, the RBI added to its gold reserves in April and gold ETFs witnessed outflows for the first time in 12 months.