India's Gold Market Heats Up Ahead of Festive Season
India's gold market has seen a significant improvement in July, driven by increasing demand for jewelry and gold futures ahead of the festive season. According to Kavita Chacko, Research Head for India at the World Gold Council (WGC), consumers are taking advantage of lower and more stable gold prices, leading to higher footfall and recovery in demand beyond essential wedding-related purchases.
The WGC's latest update notes that gold prices stabilized in July before reaching two-month highs in early August. The international gold price rose 9% in the first two weeks of August to $4,391/oz, while domestic prices gained nearly 7% to INR151,744/10g.
Domestic gold prices are still below import parity, indicating plenty of local supply. However, market feedback suggests that the exchange of old gold for new jewelry has increased market supply and kept prices at a discount to the landed cost. While discounts narrowed meaningfully in August, they remained above July's average $34/oz.
The WGC also reported an increase in imports last month, with import value rising to $4.16 billion, more than double June's $1.97 billion. Import volumes are estimated to have increased to 40-45t, up from 20t in June. The recovery in imports points to stronger physical demand compared to recent months.