Indian Gold Market Sees Signs of Recovery as Demand Picks Up

After facing significant headwinds in recent months, the Indian gold market is showing signs of recovery. India ranks as the second-largest gold market behind China.

The price of gold stabilized in July and began recovering in early August, gaining about 7 percent through the first two weeks of this month in rupee terms.

Rupee strength offset the rise in international gold prices, which gained about 9 percent through the same period. According to the World Gold Council, shifting monetary policy expectations, a weaker U.S. dollar, and renewed inflows into gold ETFs supported gold prices, contributing to the recent recovery in the gold market.

Even with the price recovery, gold is still selling at a modest discount in India, indicating ample supply. The exchange of old gold jewelry for new has protected supply, but the discount has narrowed from as high as $100 per ounce in mid-May and early June to around $45 in mid-August.

Gold imports rose in July, signaling stronger demand, doubling from 20 tonnes in June to an estimated 40-45 tonnes. Last year's surging gold price created significant headwinds for the Indian gold jewelry market, but with prices moderately lower, jewelry demand has improved.