India’s gold market is showing signs of recovery following the sharp price correction in June, with gold prices gaining in August and jewellery demand strengthening, according to the latest India Gold Market Update from the World Gold Council (WGC).

International and domestic gold prices stabilised in July before moving higher in early August. The LBMA Gold PM price rose 9% during the first two weeks of August to US$4,391 per ounce, while domestic gold prices increased nearly 7% to ?151,744 per 10 grams. The appreciation of the Indian rupee against the US dollar partly limited the increase in domestic prices.

Jewellery Demand Improves

According to the WGC, lower and more stable prices have supported jewellery purchases, with consumers responding to the improved price environment. Retailers and manufacturers have also begun replenishing inventories ahead of the upcoming festive season.

The recovery follows a period of weaker demand after the June price correction. The latest movement suggests that price stability is helping bring consumers and trade buyers back into the market.

Festive Inventory Builds

For jewellery retailers and manufacturers, the inventory replenishment ahead of the festive season is an important indicator of improving trade activity. The WGC noted that the recovery is taking shape as market participants adjust to the changed price environment.

The market will now be closely watched for the sustainability of consumer demand as gold prices remain elevated. The festive and wedding seasons are expected to provide a further indication of whether the recent improvement translates into sustained jewellery demand.