India’s gold market is showing clear signs of recovery after the sharp price correction in June, with jewellery demand picking up, imports rebounding and investors continuing to add exposure to the precious metal ahead of the crucial festive and wedding season.
According to the World Gold Council (WGC), domestic gold prices rose nearly 7% in the first two weeks of August to Rs 1,51,744 per 10 grams, while international prices climbed 9% to $4,391 an ounce. The recovery followed a period of relative stability in July and marked a significant shift in market sentiment after June’s steep correction.
The lower and more stable prices appear to have brought consumers back to the jewellery market. Industry feedback cited by the WGC suggests that deferred purchases have started returning, lifting store footfalls and demand beyond essential wedding-related purchases. Manufacturers are also seeing higher order flows, while jewellers have stepped up inventory replenishment ahead of the festive season.
The revival is particularly significant because record-high gold prices had forced many consumers to postpone purchases or opt for lighter jewellery. The recent correction, followed by a period of price stability, appears to have created a window for buyers who had been waiting on the sidelines.
Old-gold exchange is also playing a bigger role in supporting jewellery purchases. The WGC said exchanges of old gold for new jewellery have increased market supply and helped keep domestic prices below import parity. Discounts to landed prices, however, have narrowed sharply—from around $100 an ounce in mid-May and early June to about $45 an ounce by mid-August.
Investment demand, meanwhile, has remained supportive despite moderating from the exceptionally strong levels seen earlier in the year. Gold ETFs continued to attract money in July, with net inflows of Rs 1,560 crore, although this was 55% lower than in June. Holdings increased by 1 tonne to 120 tonnes, while assets under management rose 2% month-on-month to Rs 1.73 lakh crore.
The momentum has continued into August. Gold ETFs are estimated to have attracted another Rs 1,179 crore in net inflows in the first two weeks of the month, indicating that investors remain willing to use gold as a portfolio hedge even as prices recover.
Investor participation has also broadened. As many as 57,000 new gold ETF folios were added in July, taking the total number of accounts to 1.253 crore.
Physical investment demand in bars and coins has held up as well, although it remains below the elevated levels witnessed earlier in the year. The June correction encouraged investors to accumulate gold at lower prices, while the subsequent rebound appears to have renewed interest.
The futures market has also become more active, with trading volumes and turnover picking up in July. Gold imports rebounded during the month, providing another indication that underlying demand conditions in India are improving.
For the Indian market, the key test now is whether this recovery can translate into sustained buying through the festive and wedding season. Elevated prices remain a constraint, but the combination of more stable prices, pent-up jewellery demand, stronger retailer stocking, healthy investment flows and rising gold imports points to a more constructive demand environment.
The WGC’s assessment suggests that the Indian gold market is moving from a period of price-led disruption towards recovery. With consumers having adjusted to a much higher price regime, even a relatively stable market could encourage postponed purchases to return—potentially setting the stage for a stronger festive season.
