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India’s gold market shows strength through festive season

 
 India’s gold market shows strength through festive season (photo credit: PR)
India’s gold market shows strength through festive season
(photo credit: PR)

Gold priced in rupees gained 5.5% in October despite a slight depreciation of currency

International and Indian domestic gold prices have fallen by 8% since the end of October, but the precious metal remains one of the country’s best-performing assets to date, according to a recent report by the World Gold Council.

Kavita Chacko, head of research in India for World Gold Council, wrote in a report that Indian gold prices have traded at a marginal discount to international prices and demand stayed strong throughout Diwali, the Hindu festival of lights.

She attributed the solid demand for an improved consumer sentiment driven by higher prices in the gold market.

“The price increase since Diwali 2023 has enhanced consumer sentiment, positioning it as a long-term investment,” she wrote. “Despite a year-over-year drop in the volume of gold sold, the value of sales increased.”

Paper gold performing well

Chacko said Indian gold ETFs attracted strong inflows in October.

 Inflows continue to increase among Indian gold ETFs. (Source: World Gold Council) (credit: PR)
Inflows continue to increase among Indian gold ETFs. (Source: World Gold Council) (credit: PR)

“From July to October, monthly average net inflows into Indian gold ETFs reached $183 million, a significant increase from the average of $63 million in the first half of the year,” she said. “According to the Association of Mutual Funds in India, October saw record net inflows of $233 million, pushing the total assets under management for Indian gold ETFs to a new high of $5.3 billion.”

Chacko said this move represented a 12% month-over-month and 70% year-over-year increase.

Imports trending higher

Gold imports also moved higher in October, with imports into India totaling $7.13 billion, up from $4.39 billion in the previous month.

“(This is) reflecting the seasonal uptick in demand for festivals and weddings,” Chacko said. “Our estimates indicate that the volume of imports was approximately 90 to 92 tonnes, higher than the 59 tonnes imported in September.”

 Gold imports continue to trend higher in India. (Source: World Gold Council) (credit: PR)
Gold imports continue to trend higher in India. (Source: World Gold Council) (credit: PR)

Year-to-date imports have grown by 21%, totaling $44 billion, with volumes remaining steady at about 635 tonnes.

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