India's gold demand recovery likely to strengthen ahead of festive season: World Gold Council
While elevated prices could continue to influence jewellery purchases, investment demand is expected to remain supportive
India's gold market is showing a potential recovery heading into the festive season, according to the World Gold Council's latest update. Improved jewellery demand, steady investment interest, and a resurgence in imports suggest stronger market conditions, despite the fact that high prices may still impact purchases. While gold prices have risen after a sharp correction in June and stability in July, investors remain positive due to shifting monetary policies, a weaker US dollar, and increased inflows into gold ETFs.
The uptick in prices has aligned with a recovery in physical demand: consumers are taking advantage of the current prices to buy jewelry, and deferred purchases are returning to the market. Meanwhile, manufacturers have increased their inventory in anticipation of the festive season. Investment demand remains supportive, with gold ETFs recording net inflows in July, although at a lower rate compared to previous months.
ETF holdings rose by 1 tonne, and assets under management grew by 2 percent. Trading activity in gold futures also improved, with average daily volumes on the Multi Commodity Exchange of India increasing to 14.9 tonnes, and average daily turnover climbing 9 percent month-on-month. Gold imports more than doubled in July, reflecting stronger physical demand and inventory replenishment by manufacturers and retailers.
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