Gold Market Recovery Gains Momentum Ahead of India's Festive Season

India's gold market is showing signs of recovery ahead of the festive season. According to the World Gold Council, jewellery demand and investment interest have improved, while imports have rebounded. The council attributed this turnaround to shifting monetary policy expectations, a weaker US dollar, and renewed inflows into gold exchange-traded funds.

Gold prices rose 9% in the first two weeks of August to $4,391 per ounce internationally, with domestic prices gaining nearly 7% to ₹1,51,744 per 10 grams. This price increase coincided with a recovery in physical demand, as consumers viewed recent price movements as an opportunity to buy. Jewellers also reported higher order flows and increased inventory ahead of the festive season.

Investment demand remained supportive, despite moderating from elevated levels earlier this year. Indian gold ETFs recorded net inflows of ₹1,560 crore in July, a 55% decrease month-on-month. However, assets under management rose 2% to ₹1,73,300 crore, and ETF holdings increased by 1 tonne to 120 tonnes.