Jewellery Purchases and Gold ETF Flows Improve Since Mid-June
In contrast, bar and coin demand appears to have cooled, finds the World Gold Council.
Chennai: After a month-long lull from mid-May to mid-June, consumer demand for gold jewellery has begun to recover, which was also evident in the drop in discounts. Gold ETFs also recorded a rebound in June.
Driven by seasonally softer demand, an inauspicious period, and policy measures and the Prime Minister’s appeal to limit gold purchases, jewellery purchases had dropped between mid-May and mid-June.
However, consumer buying has picked up in recent weeks, led primarily by jewellery.cIn contrast, bar and coin demand appears to have cooled, finds the World Gold Council.
The pullback in gold prices and the relative price stability are said to be stimulating jewellery purchases. The promotional campaign by retailers, including discounts, exchange offers, and flexible payment terms, have also been supporting sales. Notably, demand has not been limited to wedding-related purchases. Manufacturers too have been receiving order bookings from retailers in preparation for the festive season from August.
At the same time, softer prices have tempered demand for bars and coins, which are typically bought for investment purposes.
Major listed jewellery retailers reported a strong April–June quarter despite an inauspicious period that typically tempers purchases. Revenue growth was broadly in the high 30–60 per cent range, supported by regional festivals, the summer wedding season and Akshay Tritiya during the early part of the quarter.
Gold price discounts in the domestic market have narrowed considerably from the elevated levels following the import duty hike in May and early June. Discounts averaged around $20/oz to the landed price during the first two weeks of July, significantly lower than the peak discount of nearly $150/oz recorded in May.
Indian gold ETFs too recorded a rebound in June, as investors bought into the price dips. Net inflows during the month were Rs 34.4 billion, the highest since February. Holdings increased by 2.2 tonnes to 119 tonnes, while the cumulative AUM fell 8 per cent month-on-month, reflecting the decline in gold prices during the month.