Gold Prices Surge as Festive Season Demand Boosts Market
Gold prices have regained momentum in August after a relatively subdued performance in June and July. According to the World Gold Council, gold prices increased by around 9% in international markets and nearly 7% in India during the first two weeks of August.
The rise in India was slightly lower than the international increase due to the appreciation of the Indian rupee against the US dollar. Several factors are supporting gold prices, including expectations that the US Federal Reserve may not raise interest rates in September, weakness in the US dollar, recovering jewellery demand, strong investment interest in Gold Exchange-Traded Funds (ETFs), and higher imports.
Gold ETF investments have remained strong, with around ₹1,560 crore attracted in July. India's gold imports also increased significantly, rising from around 20 tonnes in June to 40-45 tonnes in July. The combination of investment demand, jewellery purchases, higher imports, and expectations surrounding US monetary policy has strengthened the outlook for gold.
Market experts expect gold to remain broadly positive, although prices can move sharply depending on global interest rates, the US dollar, geopolitical developments, and currency movements. For investors, the recent rally is a reminder that gold can play a role as a diversification asset, but short-term price movements should not be treated as a guarantee of future returns.