What is the story about?
Gold prices in India remain firm despite signs of fatigue in the international market, raising the question: can domestic demand continue to insulate local bullion rates from global softness?
As of Tuesday (August 5), 24K gold was priced at ₹1,01,410 per 10 grams, with 22K and 18K variants at ₹92,960 and ₹76,060 respectively. The rates reflect the twin impact of strong seasonal demand and a weakening rupee, even as global spot gold hovers near $3,371 an ounce — off its recent highs, but still elevated on expectations of a US Federal Reserve rate cut in September.
Rupee weakness amplifies import costs
The rupee recently dropped to a 5.5-month low against the US dollar, making gold imports more expensive. This currency movement is one of the primary drivers of rising domestic gold prices, even when international rates are range-bound.
“Gold and silver prices gained due to disappointing U.S. job data, which raised the likelihood of a Fed rate cut. A sharp fall in the rupee also supported prices in the Indian market,” said Rahul Kalantri, VP Commodities at Mehta Equities Ltd.
With India importing nearly all of its gold, fluctuations in the rupee-dollar exchange rate have a direct bearing on local pricing. A sustained depreciation could keep domestic prices elevated, regardless of global easing.
Seasonal demand still intact
India’s gold consumption is deeply tied to its cultural and seasonal calendar. The ongoing wedding season and approaching festivals like Raksha Bandhan and Ganesh Chaturthi are expected to keep retail demand buoyant.
“The ongoing festive season and robust wedding demand will further underpin prices. Elevated inflationary pressures and continued central bank buying are also providing a solid floor for bullion,” said Aksha Kamboj, Vice President of the India Bullion and Jewellers Association (IBJA) and Executive Chairperson at Aspect Global Ventures.
Retail jewellers across metros have reported steady footfalls, and many expect demand to strengthen through September, regardless of minor price corrections.
Global momentum at a crossroads
Gold’s recent rally was fuelled by expectations of monetary easing in the US, triggered by weaker-than-expected payroll numbers. Traders now see a 92% chance of a Fed rate cut in September. However, some of that momentum has paused, particularly after renewed tariff rhetoric from US President Donald Trump targeting India’s Russian oil imports.
Central banks and reserve trends offer long-term tailwind
A key structural support for gold remains ongoing central bank buying. DSP Mutual Fund’s Netra Report notes that since 2022, central banks have purchased nearly 1,000 tonnes of gold annually — more than a quarter of global mining supply.
“With few alternatives to the dollar, gold has emerged as the preferred non-dollar reserve asset,” the report notes. India, which accounts for about 15% of the world’s privately held gold, stands to benefit from continued global accumulation trends.
Strategy ahead
For investors, short-term volatility remains a factor. According to Kalantri, domestic gold has near-term support at ₹99,450 and resistance near ₹1,01,560 per 10 grams.
Experts suggest that investors avoid chasing rallies and instead focus on gradual accumulation.
“Buying in tranches remains a prudent strategy in an environment where macro shifts and policy actions can alter sentiment quickly,” said Kamboj.
-With Reuters inputs
As of Tuesday (August 5), 24K gold was priced at ₹1,01,410 per 10 grams, with 22K and 18K variants at ₹92,960 and ₹76,060 respectively. The rates reflect the twin impact of strong seasonal demand and a weakening rupee, even as global spot gold hovers near $3,371 an ounce — off its recent highs, but still elevated on expectations of a US Federal Reserve rate cut in September.
Rupee weakness amplifies import costs
The rupee recently dropped to a 5.5-month low against the US dollar, making gold imports more expensive. This currency movement is one of the primary drivers of rising domestic gold prices, even when international rates are range-bound.
“Gold and silver prices gained due to disappointing U.S. job data, which raised the likelihood of a Fed rate cut. A sharp fall in the rupee also supported prices in the Indian market,” said Rahul Kalantri, VP Commodities at Mehta Equities Ltd.
With India importing nearly all of its gold, fluctuations in the rupee-dollar exchange rate have a direct bearing on local pricing. A sustained depreciation could keep domestic prices elevated, regardless of global easing.
Seasonal demand still intact
India’s gold consumption is deeply tied to its cultural and seasonal calendar. The ongoing wedding season and approaching festivals like Raksha Bandhan and Ganesh Chaturthi are expected to keep retail demand buoyant.
“The ongoing festive season and robust wedding demand will further underpin prices. Elevated inflationary pressures and continued central bank buying are also providing a solid floor for bullion,” said Aksha Kamboj, Vice President of the India Bullion and Jewellers Association (IBJA) and Executive Chairperson at Aspect Global Ventures.
Retail jewellers across metros have reported steady footfalls, and many expect demand to strengthen through September, regardless of minor price corrections.
Gold’s recent rally was fuelled by expectations of monetary easing in the US, triggered by weaker-than-expected payroll numbers. Traders now see a 92% chance of a Fed rate cut in September. However, some of that momentum has paused, particularly after renewed tariff rhetoric from US President Donald Trump targeting India’s Russian oil imports.
Central banks and reserve trends offer long-term tailwind
A key structural support for gold remains ongoing central bank buying. DSP Mutual Fund’s Netra Report notes that since 2022, central banks have purchased nearly 1,000 tonnes of gold annually — more than a quarter of global mining supply.
“With few alternatives to the dollar, gold has emerged as the preferred non-dollar reserve asset,” the report notes. India, which accounts for about 15% of the world’s privately held gold, stands to benefit from continued global accumulation trends.
Strategy ahead
For investors, short-term volatility remains a factor. According to Kalantri, domestic gold has near-term support at ₹99,450 and resistance near ₹1,01,560 per 10 grams.
Experts suggest that investors avoid chasing rallies and instead focus on gradual accumulation.
“Buying in tranches remains a prudent strategy in an environment where macro shifts and policy actions can alter sentiment quickly,” said Kamboj.
-With Reuters inputs
