Kavita Chacko, Head of India Research at the World Gold Council (WGC), stated that Indian gold jewellery demand strengthened notably in July as gold prices stabilised ahead of the festive season and consumers responded positively to recent price movements. Investment demand remained solid, while futures market activity also picked up. She noted that market expectations for improved demand during the upcoming festive season are rising.
In WGC’s latest monthly India update, Chacko wrote that gold prices stabilised last month before climbing to a two-month high in early August. She mentioned that the international LBMA Gold PM price rose 9% in the first two weeks of August to $4,391 per ounce, while domestic Indian gold prices gained nearly 7% to 151,744 rupees per 10 grams over the same period. She added that a stronger Indian rupee against the US dollar partially offset the pass-through of higher international gold prices, limiting gains in domestic rates.
Chacko said domestic Indian gold prices are still below import parity, indicating ample local supply. Market feedback shows rising volumes of old gold exchanged for new jewellery, adding to available supply and keeping local prices below landed cost. Although the discount has narrowed substantially — from roughly $100 per ounce in mid-May and early June to around $45 per ounce in mid-August — it remains above the July average of $34 per ounce.
Rebounding Jewellery Demand
WGC also received reports of strengthening jewellery demand, with consumers viewing recent price dips as buying opportunities. Industry feedback, Chacko wrote, shows deferred purchASIng returning to the market and higher foot traffic. Apart from wedding-related essential demand, other segments of jewellery consumption are recovering. Manufacturers are reportedly receiving more orders, and jewelers are speeding up restocking ahead of the festive season, signalling growing confidence in seasonal demand.
She also pointed out that physical investment demand, while softer than previous peaks, provided support during price corrections. Lower gold prices continued to attract investors seeking strategic gold allocation, and the recent rebound appears to have renewed market interest.
ETF Holdings and Investor Accounts Keep Expanding
Indian gold ETFs continued to attract capital inflows in July, though at a slower pace than June. Citing data from the Association of Mutual Funds in India (AMFI), Chacko said net inflows reached 15.6 billion rupees (approximately $163 million) in July, down 55% month-on-month. Holdings rose by 1 tonne to 120 tonnes, matching WGC’s preliminary estimates. Over the same period, total assets under management (AUM) for gold ETFs increased 2% month-on-month to 173.3 billion rupees (roughly $1.81 billion). She added that inflows peRSIsted in the first two weeks of August, estimated at 11.79 billion rupees (around $124 million).
She further noted rising investor participation, with 57,000 new accounts opened in July, bringing the total to 12.53 million.
Futures Trading and Imports Improve in Tandem
After weak performance in the second quarter, Indian gold futures trading recovered in July amid more active traders and rising hedging demand as gold prices stabilised. Chacko wrote that average daily trading volumes for MCX India gold futures climbed to 14.9 tonnes, above the prior three-month average of 13.5 tonnes. Average daily turnover rose 9% month-on-month to 214 billion rupees (about $2.2 billion). Even so, market activity remained subdued compared with past highs: average daily volume was 59% below the January peak and 8% lower than July 2025, while turnover was still up 35% year-on-year due to higher nominal gold prices.
On the import side, India’s gold imports rebounded sharply in July after two consecutive weak months, showing manufacturers and retailers restocking ahead of the festive season alongside improved demand. Chacko said gold import values reached $4.16 billion in July, more than doubling from $1.97 billion in June. Import volumes are estimated at 40–45 tonnes, versus roughly 20 tonnes in June.
She pointed out that while recycled gold — mainly from old jewellery exchanges — continues to supplement supply, rising imports confirm stronger physical demand relative to recent months. Despite higher imports, gold still accounts for a relatively modest 5% of India’s total merchandise import bill, below the 11% average recorded between January and March.
More Optimistic Outlook for the Festive Season
Looking ahead, Chacko said WGC believes the demand environment is improving, lifting expectations for a stronger festive season. She also cautioned that peRSIstently elevated gold prices may weigh on jewellery purchases, while investment demand should offer underlying support. For the global gold market, synchronised improvements in India’s jewellery, ETF, futures and import data typically signal a recovery in pre-festive restocking and consumer momentum, potentially offering some backing to international gold prices.