India's Gold Market Shows Signs of Recovery Ahead of Festive Season

India's gold market is showing signs of recovery ahead of the upcoming festive season. According to the World Gold Council, better jewellery demand, steady investment interest, and rising imports are driving this recovery.

The gold prices have regained ground after a recent correction, supporting demand. International gold prices rose 9% in the first two weeks of August to $4,391 per ounce, while domestic prices gained nearly 7% to Rs 1,51,744 per 10 grams as of August 14.

The recovery was supported by shifting monetary policy expectations, a weaker US dollar, and renewed inflows into gold exchange-traded funds (ETFs). Jewellery demand strengthened as consumers viewed recent price movements as an opportunity to buy, while deferred purchases returned to the market. Manufacturers also reported higher order flows, with jewellers increasing inventory ahead of the festive season.

Investment demand remained supportive despite moderating from the elevated levels seen earlier in the year. Indian gold ETFs recorded net inflows of Rs 1,560 crore in July, although this was 55% lower month-on-month. ETF holdings increased by 1 tonne to 120 tonnes, while assets under management rose 2% to Rs 1,73,300 crore.