Domestic gold prices surge 10% amid global price rally

Domestic gold prices have risen by 10 per cent on a year-to-date basis on the back of the strength in global gold prices, which have surged by 18 per cent year-to-date, driven by robust central bank purchases, heightened geopolitical risks, and growing expectations of a monetary policy pivot from the US Federal Reserve, according to the World Gold Council.

The reduction in import duty has ignited a resurgence in gold demand across India. Reports from the recently concluded India International Jewellery Show indicate a substantial increase in order bookings from retailers, particularly in preparation for the upcoming festive and wedding season. Manufacturers have noted that in some cases, orders have reached levels not seen in several years, underscoring the strong buying interest among jewellery retailers and consumers alike.

The trend of bar and coin buying has also remained robust, with both consumers and jewellers capitalizing on the more attractive prices to stock up for future manufacturing needs.

Historical analysis suggests that Indian consumer demand, encompassing jewellery and bar and coin demand, could see an additional 50 tonnes or more in the second half of 2024. This potential increase is fueled by a combination of an initial boost in consumer appetite due to the more attractive prices and a longer-term alignment of local prices with international rates.