Gold Prices Rise in India and Worldwide: Festive Season Boosts Demand
Gold prices are seeing a strong comeback in both international and domestic markets. The World Gold Council reports that increased jewellery buying and investment activities are expected to continue. Rural demand is also recovering, thanks to a good monsoon season and higher crop sowing this year.
Gold Prices on the Rise
In September, international gold prices rose by 2.8%, while domestic prices increased by 1.6%. Despite these gains, Indian gold prices are still 2% below pre-Union Budget levels due to a 9% reduction in import duties announced in July. In August, international prices rose by 3.7% and domestic prices by 3.9%, driven by expectations of easing interest rates in the U.S.
Strong Demand in India
Gold demand in India has remained strong, especially after the import duty cut. Although demand for jewellery and bars and coins has stabilized, buying activity is still stronger than before. Consumers are now more interested in heavier jewellery pieces. The festive and wedding season, from late August through December, is expected to further boost sales.
Gold ETFs and RBI Purchases
Indian gold exchange-traded funds (ETFs) have seen a surge in investor interest since the import duty cut. August saw record inflows of Rs 21 billion (~USD 238 million), with total assets under management reaching Rs 374 billion (~USD 4.4 billion) by the end of August. The Reserve Bank of India (RBI) has also been buying gold, acquiring 10.3 tons over six weeks leading up to September 6, bringing its total purchases for the first eight months of the year to 50 tons.
Record Gold Imports
India saw a record surge in gold imports in August, with a total value of USD 10.1 billion. This is a threefold increase compared to the previous month and double the value from a year ago. In volume terms, gold imports reached approximately 140 tons in August. From January to August, gold imports have risen by 30% year-on-year, totaling USD 32 billion.
Doubts Revealed
Gold Prices -: Gold prices refer to how much money you need to buy a certain amount of gold. When prices rise, it means gold is becoming more expensive.
International and Domestic Markets -: International markets are places where people from different countries buy and sell things, like gold. Domestic markets are places where people buy and sell things within one country, like India.
Jewellery Buying -: Jewellery buying means people are purchasing items like gold necklaces, rings, and bracelets.
Investment Activities -: Investment activities are when people put their money into things like gold, hoping it will be worth more in the future.
Rural Demand -: Rural demand means people living in villages and countryside areas are buying more things, like gold.
Monsoon Season -: Monsoon season is the time of year when it rains a lot in India, which helps farmers grow crops.
Gold ETFs -: Gold ETFs (Exchange-Traded Funds) are like special stocks that represent gold. People can buy and sell them easily.
Reserve Bank of India -: The Reserve Bank of India (RBI) is the main bank in India that controls the money supply and helps keep the economy stable.
Gold Imports -: Gold imports mean bringing gold into India from other countries.
USD 10.1 billion -: USD 10.1 billion means 10.1 billion US dollars, which is a lot of money. It shows how much gold India bought from other countries in August.