Gold Prices Swing Wildly Amid Festive Season Chaos
Gold prices have been swinging wildly in recent months, leaving both buyers and investors on edge. In August, gold prices hit fresh highs before cooling off in September, keeping everyone uncertain about their next move.
The World Gold Council's latest report suggests that the current price swings are due to strong investment flows and a softer US dollar in August. However, this momentum did not carry into September, with international gold prices falling 3.9% and domestic prices down 4.6%. The WGC attributed the decline to changing expectations around US Federal Reserve policy and softer global gold ETF flows.
Despite the short-term fall, gold remains expensive, and price swings continue as India's peak festive and wedding season approaches. Digital gold continues to gain traction, with purchases averaging ₹2,500 crore a month between June and August. However, the convenience of buying gold digitally should not be confused with the product being identical to a gold ETF or physical gold.
Gold futures trading has also seen a pickup in activity, with average daily turnover rising 38% month-on-month in August to ₹29,500 crore on the Multi-Commodity Exchange. India's gold imports fell sharply in August to US$2.3 billion, down 45% from July and 58% from a year earlier.
The WGC expects demand to improve as the festive and wedding season progresses, supported by steady investment demand and resilient wedding-related buying. However, elevated prices and volatility could continue to weigh on discretionary jewellery purchases.