India Buying Gold: Market Analysis and Charts Provide Insights

India's gold buying habits are influenced by various market factors, including the price of gold. Historically, Indian gold demand has been high during festivals and weddings.

The Indian government's gold import policy has a significant impact on gold prices. In 2013, the government introduced a 80:20 rule, which required importers to source 20% of their gold from domestic sources.

India's gold demand is largely driven by the rural population, who tend to buy gold as a store of value and a symbol of wealth. The rural population's preference for gold is reflected in the country's gold demand patterns.

On a similar theme: Indian Gold Market Chart

India's Gold Reserves have seen a significant boost in recent months. The RBI made a sizeable addition to its gold reserves in October, boosting its total reserves by 8% y-t-d to 868t.

Around 14t of gold was added to the central bank's foreign exchange reserves in the month, bringing total gold y-t-d purchases to 64t. This makes it the third-highest annual net gold purchase by the RBI.

Gold now accounts for 10% of total foreign exchange reserves, the highest share since 1999. The RBI has also focused on holding its gold reserves domestically.

As of end-September 2024, 60% of the RBI's total gold reserves – equivalent to 510t – were held domestically, an increase of 102t since March 2024. This marks a significant rise from the 38% held in domestic storage in March 2023.

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Gold demand in India has been on the rise, with strong inflows into gold ETFs in October. The long-term capital gains treatment for gold, announced in July, has provided a boost, with average monthly net inflows reaching INR15.4bn/US$183mn.

The Indian gold ETFs have seen a significant increase in inflows since July, with a 70% year-over-year growth in October, pushing the total assets under management to a new high of INR445bn (~US$5.3bn). This is a 12% month-over-month increase.

Record net inflows of INR19.6bn (~US$233mn) were seen in October, adding 12.2t of gold to the funds' total holdings of 54.5t. This represents a 32% year-over-year growth.

Gold imports also rose in October, reaching $7.13bn, a 61% increase from the previous month. The volume of imports was approximately 90-92t, higher than the 59t imported in September.

Since the reduction in import duties in July, monthly imports have averaged around 95t, up from 50t earlier in the year. Year-to-date, gold imports have grown by 21%, totaling $44bn, with volumes remaining steady at around 635t.

The rise in gold demand has contributed to India's growing foreign exchange reserves, which have scaled a new high of $692.296 billion. The reserves are expected to cross $700 billion in FY25 sooner than expected.

India's gold inflows have been on the rise, with record-breaking purchases made by the Reserve Bank of India (RBI) in recent months. The RBI bought 8.7 tonnes of gold in January, making it the largest purchase by the central bank since July 2022.

Gold ETF fund flows have also seen a significant boost, with cumulative gold holdings reaching new highs. According to Chart 3, record inflows have boosted cumulative gold holdings, with monthly gold ETF fund flows in INRbn and total holdings in tonnes reaching new levels.

Take a look at this: The Federal Reserve Bank of New York Gold Vault

The RBI's gold reserves have hit historic highs, with the central bank's net purchases and reserves reaching 868t in October. This represents an 8% y-t-d increase, with 14t of gold added to the central bank's foreign exchange reserves in the month.

Gold imports have also expanded, with monthly gold imports reaching new levels. According to Chart 5, gold imports in tonnes and US$bn have seen a significant increase, with the RBI importing 8.7 tonnes of gold in January.

The RBI has been focusing on holding its gold reserves domestically, with 60% of its total gold reserves held domestically as of end-September 2024. This represents a significant rise from the 38% held in domestic storage in March 2023.

India's gold reserves have been increasing at a regular basis, with the RBI's gold holding climbing to 812.3 tonnes in January, from 803.58 tonnes in December 2023. Gold is the second largest contributor to India's forex reserve, and the RBI's gold purchase is the third-highest annual net gold purchase by the RBI, after the 257t purchased in 2009 and 77t in 2021.

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Gold imports in India have been on the rise, with chart 5 showing a significant expansion in monthly gold imports. This is likely due to the fact that gold buyers have been keeping it light this Dhanteras, as prices have jumped.

As of 14 November 2024, the Ministry of Commerce and Industry, CMIE, and World Gold Council estimates show that gold imports have been substantial, with the data including World Gold Council estimates.

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As of 7 November 2024, domestic gold prices in India are trading at a marginal discount to international prices.

This means that if you were to buy gold internationally, you'd likely pay a bit more than what you'd pay in India.

Gold imports have been expanding, with monthly gold imports reaching significant levels as of November 2024.

The prices of gold have been jumping, which has led to a decrease in gold purchases during Dhanteras, a significant festival for gold buyers.

According to the Ministry of Commerce and Industry, CMIE, and World Gold Council, gold imports have been substantial, with estimates suggesting a notable increase.

As of November 2024, the total value of gold imports is substantial, with estimates suggesting a value of over US$bn.