The world’s second-largest gold market after China, experienced a resurgence in Indian gold demand during May’s Akshaya Tritiya festival. Following a slower March and April, the country’s gold purchases picked up significantly during this key festival.
Gold Prices Drop, Boosting Purchases
Gold prices in India had surged earlier in the year, making it difficult for many to buy. However, prices dipped slightly ahead of Akshaya Tritiya on May 10. The World Gold Council reported that gold sales exceeded expectations during the festival.
Gold prices had reached their peak in mid-April, but by May, prices had declined by around 4%. Despite this slight reduction, gold prices had still increased by 15% since the beginning of the year.
Record-Breaking Sales Despite High Prices
The World Gold Council suggests that gold sales during Akshaya Tritiya likely hit record levels, even though prices were 20% higher than the previous year. Despite the shortened festival, both urban and rural areas saw strong buying activity. Many buyers appeared unfazed by the higher prices, speculating that gold prices might continue to rise.
Wedding Jewelry and Gold Pre-Bookings
Jewelers and gold traders revealed that many customers had reserved gold jewelry, bars, and coins in advance of the festival, taking advantage of the slight price drop. Wedding jewelry purchases were also strong, despite the wedding season being a few months away.
Increased Gold Imports and RBI Purchases
Indian gold imports surged in April, with the country importing around 50 tons, up from 34 tons in March. The value of these imports doubled compared to the previous month, reflecting the increased demand.
In addition to consumer demand, the Reserve Bank of India (RBI) increased its gold reserves, adding 24 tons of gold in the first four months of 2024. This marked a significant rise compared to the 16 tons added throughout the entire year of 2023.
Gold’s Cultural and Financial Significance in India
India’s relationship with gold runs deep. The country is estimated to hold around 25,000 tons of gold, with much of it hidden in the black market. Gold is not only a part of cultural traditions, especially in weddings, but it’s also seen as a secure way to preserve wealth.
Gold ownership spans all income levels, with a 2018 survey revealing that 9 out of 10 Indian households possess gold, including 75% of the poorest families. Even during the COVID-19 pandemic, many Indians used gold to secure loans or sold it to manage financial hardships.
Gold’s enduring value in India is evident not only during festivals but also in its role as a safeguard for wealth across economic classes. To learn more about daily updates on gold market trends, visit the Daily Gold Update. Stay informed on the latest Indian gold demand and industry insights at Daily Gold Signal.
