India’s gold market delivered mixed signals in May 2024. Despite a brief lull during the month, gold prices have risen more than 30% so far this year, reflecting sustained investor interest and resilient demand across multiple segments.
Jewelry sales cooled temporarily following the peak wedding season, but other parts of the market remained robust. Physical investment in gold — including coins and bars — continued to attract buyers, while gold-backed lending experienced a sharp surge, increasing by roughly 120% year-over-year as households and small businesses leveraged gold holdings for credit.
Gold exchange-traded funds (ETFs) returned to positive territory in May after two consecutive months of outflows, registering modest inflows that signaled renewed investor confidence in paper-backed bullion exposure. The Reserve Bank of India paused active gold purchases during the month, yet the metal’s share of foreign exchange reserves reached a record high of 12.3%, underscoring its strategic importance in the country’s reserve mix.
Looking ahead, market watchers expect demand to rebound with the start of India’s main festive buying season in mid-August. Seasonal jewelry purchases and traditional gifting practices are likely to boost both physical demand and retail activity, supporting prices and market liquidity as households prepare for festivals and wedding-related spending.
Overall, the combination of strong year-to-date price gains, elevated gold-backed lending, and renewed ETF inflows suggests that while short-term dynamics moderated in May, the underlying fundamentals for gold demand in India remain solid. Seasonal demand and shifting reserve allocations will be key factors to watch in the coming months.