India's Gold Market Sees Strong Recovery Ahead of Autumn Festivals

India's gold market has stabilized after a sharp correction in June and is now showing signs of recovery, according to data from VT Markets. In rupee terms, gold prices have risen about 7% through the first two weeks of August, while international prices gained around 9%. The rebound is attributed to shifting monetary policy expectations, a weaker US dollar, and renewed inflows into gold ETFs.

The World Gold Council pointed out that these factors are driving the recovery. Despite firmer prices, gold continues to trade at a discount in India, indicating ample supply supported by exchanges of old jewelry for new. The discount narrowed from as high as $100 per ounce in mid-May and early June to around $45 in mid-August.

Gold imports into India doubled to an estimated 40-45 tonnes in July compared to just 20 tonnes in June, while MCX India volumes reached 14.9 tonnes in July versus a 13.5-tonne three-month average. Indian gold ETF holdings are up 1 tonne, valued at ₹15.6bn ($163m), taking totals to 120 tonnes with AUM of ₹1,733bn ($18.1bn).