Indian gold market heats up in July as jewelry demand, futures and imports all improve ahead of festival season – WGC’s Chacko
Indian gold jewelry demand appears to be strengthening as consumers responded to lower and more stable gold prices ahead of the festive season, while investment demand remained steady in July and futures market activity picked up, according to Kavita Chacko, Research Head for India at the World Gold Council (WGC).
In the latest WGC India update published Wednesday, Chacko wrote that gold prices stabilized last month before reaching two-month highs in early August.
“International gold price (LBMA Gold PM) rose 9% in the first two weeks of August to US$4,391/oz, while domestic prices gained nearly 7% to INR151,744/10g,” she noted. “The appreciation of the INR against the US dollar partially offset the rise in the international price, limiting gains in domestic prices.”
Domestic gold prices are still below import parity, which indicates plenty of local supply. “Market feedback suggests that the exchange of old gold for new jewellery has increased market supply and kept prices at a discount to the landed cost,” Chacko said. “While discounts narrowed meaningfully, from around US$100/oz in mid-May and early June, to about US$45/oz in mid-August, they remained above July’s average US$34/oz.”
The WGC has also received reports that jewelry demand is strengthening with consumers viewing the recent price action as a buying opportunity. “Industry feedback suggests that deferred purchases returned to the market, resulting in higher footfall and a recovery in demand beyond essential wedding-related purchases,” she wrote. “Manufacturers have reportedly begun receiving higher order flows, and inventory replenishment by jewellers has picked up ahead of the festive season, suggesting growing confidence in seasonal demand.”
“Physical investment demand, while moderating from earlier highs, remained supportive during the period of price correction,” she added.
“Lower prices continued to attract investors seeking strategic exposure to gold, while the recent rebound appears to have revived interest.”
Indian gold ETFs also saw continued inflows in July, though not at the pace seen in June. “As per data from the Association of Mutual Funds of India (AMFI), net inflows totalled INR15.6bn (US$163mn) during the month, 55% lower m/m, while holdings increased by 1t to 120t, in line with our initial estimate,” Chacko said. “Total assets under management (AUM) rose 2% m/m to INR1,733bn(US$18.1bn). And positive flows are continuing; the first two weeks of August saw an estimated net inflow of INR11.79bn(US$124mn).”
She added that investor participation also rose. “[A] further 57k new folios (accounts) were added during July, taking the total number of accounts to 12.53mn.”
And following a slow second quarter, gold futures trading picked up in July, as traders were more active and hedging activity increased amid the gold price stabilization. “Average daily trading volumes on the Multi Commodity Exchange of India (MCX India) rose to 14.9t, up from an average 13.5t over the previous three months, while average daily turnover increased 9% m/m to INR214bn(US$2.2bn),” Chacko wrote. “Despite the improvement, activity remained below the earlier elevated levels: average daily trading volumes were 59% lower than January’s peak and 8% below July 2025 levels. Turnover, however, was 35% higher y/y, reflecting the impact of higher gold prices on traded value.”
And imports also increased significantly last month following some very low monthly totals.
“Gold imports rebounded in July after two consecutive months of weakness, suggesting an improvement in demand and inventory replenishment by manufacturers and retailers ahead of the festive season,” she said. “Import value rose to US$4.16bn, more than double June’s US$1.97bn, while import volumes are estimated to have increased to 40-45t, up from 20t in June.”
“While recycled gold – primarily from the exchange of old gold jewellery for new – continues to supplement supply, the recovery in imports points to stronger physical demand compared with recent months,” she noted. “Despite the increase, gold's share of total merchandise imports remained relatively modest at 5%, compared with the average 11% during January-March.”
Looking ahead, Chacko said the World Gold Council sees demand conditions improving, raising expectations for a stronger festive season.
“While elevated prices may continue to influence jewellery purchases, investment demand remains supportive,” she said.
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