India’s gold market is showing early signs of recovery, according to the World Gold Council’s latest India Gold Market Update. Jewellery demand is improving, investment interest remains supportive, and gold imports are rebounding ahead of the festive season.
After a sharp correction in June, gold prices stabilized in July and rose again in August. International gold prices climbed 9% in the first two weeks of August to $4,391 per ounce, while domestic prices jumped nearly 7% to Rs 1,51,744 per 10 grams as of 14 August.
The rebound is driven by changing expectations around monetary policy, a weaker US dollar and renewed inflows into gold exchange‑traded funds (ETFs). Physical demand has also picked up, with consumers returning to the jewellery market and viewing price movements as an opportunity to buy.
Manufacturers report stronger order flows and jewellers are building up inventory ahead of the festive season, signalling expectations of firm demand in the coming months. Investment demand has stayed supportive, though it has moderated from the elevated levels seen earlier in the year.
Indian gold ETFs attracted net inflows of Rs 1,560 crore in July, down 55% from the previous month. ETF holdings rose by 1 tonne to 120 tonnes and assets under management increased 2% to Rs 1,73,300 crore. In the first two weeks of August, gold ETFs recorded an estimated additional Rs 1,179 crore in net inflows.
Gold futures trading also strengthened in July. Average daily volumes on the Multi Commodity Exchange of India rose to 14.9 tonnes, up from 13.5 tonnes over the previous three months. Average daily turnover increased 9% month‑on‑month to Rs 21,400 crore.
Gold imports reflected the growing physical demand and inventory replenishment by manufacturers and retailers. Import value more than doubled in July to $4.16 billion from $1.97 billion in June, and estimated import volumes rose to 40‑45 tonnes from about 20 tonnes.
The combination of stronger jewellery demand, renewed ETF inflows, higher futures activity and a sharp recovery in imports suggests that India’s gold market is entering the festive season on firmer footing. However, elevated prices may still influence jewellery purchases.
Ponmudi R, CEO of Enrich Money, said the price rebound is now supported by improving physical demand in India. He added that consumers who postponed purchases at higher levels are gradually returning, and that retailers are rebuilding inventory ahead of Dhanteras, Diwali and wedding season.
He also noted that jewellery consumption is no longer the only source of gold demand. ETFs, bars, coins and broader investment allocations are adding another layer of demand, which could provide a stronger floor for gold during corrections.
The broader outlook remains constructive, but gold prices are unlikely to move in a straight line. Federal Reserve policy, US bond yields, the dollar, geopolitical developments and the rupee will continue to influence short‑term price movements. The key signal to watch is whether physical demand continues at these elevated price levels, indicating that consumers are accepting a structurally higher price range for gold.