The demand in India is showing signs of a pickup with the onset of the festive season, led primarily by a surge in physical investment demand for bars and coins
Aided by sustained investment interest, wedding and occasions-related jewellery purchases, gold demand could strengthen during the peak festive period (October – December), as per a World Gold Council report.
The demand could get a potential boost from consumption tax cuts as well. However, elevated prices and any renewed surge may curb overall demand, the report warned. Gold prices saw a sharp upswing in late August, with the rally accelerating through the first half of September to hit fresh all-time highs. This pushed year-to-date gains to 40 per cent. International gold prices climbed 4 per cent in August and added another 6.7 per cent in early September as bullish sentiment deepened.
Gold prices in India have closely mirrored international movements, with a weaker rupee (down 3 per cent year-to-date) magnifying domestic price gains. As of mid-September, prices had risen 7 per cent month-to-date to Rs 1,06,863 per 10 gram, bringing the YTD increase to 44 per cent, the report mentioned.
“Notably, signs of demand interest have helped narrow domestic price discounts, which briefly flipped to a marginal premium in late August and again in mid-September. This marks a noteworthy change, as domestic gold prices had been trading at a near-sustained discount since December,” WGC emphasised.
Gold demand in India is showing signs of a pickup with the onset of the festive season, led primarily by a surge in physical investment demand for bars and coins. Investment interest is reportedly outpacing jewellery purchases, as consumers are drawn in by the renewed uptrend in prices and expectations of further increases.
“Conversations with jewellery manufacturers and retailers suggest that jewellery demand, while present, remains uneven. High-value, wedding-related purchases have begun and are holding steady, while high prices have dampened lower ticket daily-wear and discretionary buying, prompting a shift to lower carat products,” the report pointed out.
Large retailers are reporting higher footfalls, supported by aggressive marketing and promotional campaigns, along with plans for new store openings. Smaller retailers, in contrast, continue to face muted demand. The report noted that robust exchange activity, where old gold jewellery is traded in for new, has also been a key contributor to overall sales. While volumes remain lower year-on-year (YoY), sales value has risen aided by the higher gold prices.
