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Aug 31

Gold rises 10% amid global price rally, central bank buying: WGC

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.


In a notable shift, domestic gold prices, which had been trading at a discount to international prices for five consecutive months, have now started trading at a premium following the Union Budget announcement.The discount had widened significantly in July, reaching a peak of around USD 80 per ounce in the third week of the month, driven by subdued demand and an increased supply of gold through various preferential trade agreements and unofficial channels.


However, wholesalers who had inventory purchased under the old customs duty regime began selling gold at a premium to the landed cost to mitigate their losses, further supported by increased consumer demand.


While the premiums have moderated recently, from USD 28 per ounce to around USD 5 per ounce, this shift highlights the changing market sentiment and the impact of rising international gold prices and potential inventory valuation adjustments.


SOURCE:ET For more Updates Do follow us on Social Media

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