Indian Gold Market Cautiously Optimistic Ahead of Festive Season

The Indian gold market is approaching the festive and wedding seasons with caution. Despite higher prices, demand for gold remains steady, especially from investment purchases. The World Gold Council notes that gold continues to trade at around 2 percent below import parity, indicating adequate local supply compared to demand.

Gold prices surged in August before pulling back in early September due to the Fed's rate hike and rising oil prices. However, the market remains optimistic about demand during the peak festive and wedding season, with large retailers reporting relatively stronger demand and increased new product launches and marketing initiatives.

The World Gold Council also notes that investment demand is steady, with a modest shift from physical to digital gold purchases. Inflows into Indian gold ETFs rose 67 percent month-on-month to ₹25.97 billion ($272 million) last month, while gold inflows into Indian funds slowed but remained positive throughout the year.