India’s gold market cooled in May as higher duties, elevated domestic prices and seasonal softness weighed on demand. Physical buying softened across jewellery, bars and coins, while imports fell from the previous month. ETF investors booked profits after the price rally following the duty hike, resulting in record May outflows before inflows resumed in June; digital gold buying also slowed, though it remained above average.
The international gold price shot up by 3% in December to US$1,812/oz, supported by expectations of a less-hawkish US Fed in the light of lower yields and dollar weakness.
The international gold price jumped by 7.4% in November to US$1,760/oz, boosted by lower yields and dollar weakness.
The domestic gold price declined by 0.7% during June, ending the month at Rs50,809/10g. Retail demand remained muted as the wedding season ended and sowing activity picked up with the onset of the monsoon.
Retail demand weakened as a sudden spike in the gold price resulted in the postponement of gold purchases in the second half of the month.
To curb the spread of COVID-19, the global restrictions have impacted the global gold supply chain, from production to refining. These supply-chain disruptions have impacted both bullion and gold dore’ imports into India.
The domestic gold price increased by 4.1% in February m-o-m and 8.4% higher than the end of 2019. The rising gold price and higher volatility in the market lured investors towards gold ETFs.
Wedding and stable domestic gold price at ~Rs 37800/10gm helped demand in first half of December but demand tailed off after 15th December after the beginning of inauspicious period and rising gold price which jumped by 3.7% from mid-December till end of the month.
We will soon be launching two regular blog posts– monthly updates on India and China by Mukesh and Ray, our analysts in Mumbai and Shanghai. These monthly posts will provide a snapshot of the health of these two global heavyweights, which together account for around half of annual global consumer demand.
Gold: Pretty sideways performance in #gold over the past few weeks, currently trading around $1283-1284/oz. https://t.co/sNhbsHzttw
