Gold Prices Surge Amid Festive Demand and US Interest Rate Expectations

Gold prices have rebounded in August after a relatively subdued performance in June and July. According to the World Gold Council, gold prices rose by around 9% in international markets and nearly 7% in India during the first two weeks of August.

The appreciation of the Indian rupee against the US dollar contributed to the lower increase in India compared to international markets.

Several factors are supporting gold prices, including expectations that the US Federal Reserve may not raise interest rates in September and weakness in the US dollar. Jewellery demand has also started recovering as consumers take advantage of prices below recent peak levels.

Investment interest in Gold Exchange-Traded Funds (ETFs) remains strong, with around ₹1,560 crore invested in July, according to AMFI data. Gold trading activity in the futures market has increased, with average volumes for gold futures on the MCX rising by around 9% in July.

India's gold imports also surged significantly, increasing from around 20 tonnes in June to 40-45 tonnes in July. This reflects stronger demand ahead of the festive season.