🌟 India Gold Market Update: How Gold Outshined in 2024
Gold proved to be the ultimate winner in 2024, outpacing other key asset classes in India despite a few challenges. From strong returns to impressive demand from investors and central banks, here’s everything you need to know about India’s gold market update as of January 2025.
💰 Gold: The Best Performing Asset of 2024
- 📈 A Year of Gains: Gold delivered a stunning 21% annual return in INR terms in 2024, despite a late-year price dip. Its performance in USD terms was even better, at 26% y/y gains.
- 📉 End-of-Year Dip: November and December saw gold prices fall, dropping 2% in December after a 4% dip in November. This decline was due to a strong US dollar rally, but persistent geopolitical risks and growing global gold ETF flows helped cushion the slide.
- 📊 Start of 2025: Gold prices rebounded in early January 2025, increasing 2.7% to $2,679/oz by January 10, with similar gains in INR terms at INR 78,360/10g.
👰 Jewellery Demand Faces Challenges
- ⏳ Subdued Demand: High prices and an inauspicious period on the Hindu calendar (mid-December to mid-January) led to weaker jewellery demand. Purchases were primarily driven by wedding-related needs.
- 📉 Discounts Reflecting Trends: Domestic gold prices traded at a discount to international prices, averaging $4/oz and widening to $15/oz by January 2025.
- ✨ Investment Interest Holds Strong: Despite sluggish jewellery sales, demand for gold coins and bars remained steady, underscoring gold’s appeal as an investment.
📈 Gold ETFs: A Record-Breaking Year
- 🚀 Strong Inflows: 2024 was a historic year for gold ETFs in India, with net inflows hitting INR 112bn (~US$1.3bn)—nearly four times higher than the previous year.
- 📊 AUM Growth: Total assets under management (AUM) surged 63% y/y, reaching INR 446bn (~US$5.2bn) by year-end.
- 📉 December Slowdown: Momentum slowed in December, with net inflows of INR 6.4bn (~US$75mn), down 50% from November’s levels.
- 🌟 New Funds Launched: Three new gold ETFs were introduced, bringing the total number of funds to 18.
🏦 RBI’s Gold Buying Spree
- 💰 Significant Purchases: The Reserve Bank of India (RBI) added 72.6t of gold to its reserves in 2024, a significant increase from 16.2t in 2023. This marks the third-highest annual purchase since 2001.
- 📈 Diversification Strategy: Gold now accounts for 10.6% of the RBI’s forex reserves, up from 7.7% a year ago, emphasizing its role as a hedge against global uncertainties.
- ⏸️ Pause in December: While December saw no new purchases, the RBI remains the second-largest buyer of gold among central banks globally for 2024.
🚢 Gold Imports: A Year of Stability
- 📉 Data Revisions: India’s gold import data for April–October 2024 underwent an 82t downward revision, attributed to double counting during platform migration.
- 📊 Stable Volumes: Despite these revisions, annual gold imports were stable at 724t, slightly below 2023’s 744t. The value of imports increased 21% y/y to US$52bn, reflecting higher gold prices.
- 📦 Monthly Trends: December imports totaled an estimated 55–60t, valued at US$4.7bn.
🔮 What’s Next for Gold in 2025?
- 💍 Jewellery Demand Recovery: With the end of the inauspicious period, demand is expected to recover from mid-January, driven by wedding purchases.
- ⚖️ Price Stability: A stable gold price environment could positively influence consumer interest in jewellery and investment alike.
- 📈 Investment Demand Growth: The bullish trend in investment demand is expected to continue, with gold ETFs remaining a favored option for portfolio diversification.
🌟 Why Gold is Still King
From record-breaking ETF inflows to the RBI’s strategic purchases, 2024 reinforced India’s long-standing love affair with gold. Despite challenges in the jewellery market, gold’s unmatched ability to preserve wealth and hedge against uncertainty makes it a leading asset class.
As 2025 unfolds, all eyes are on gold’s next move—whether it continues its upward momentum or faces new challenges in a volatile global environment. One thing is certain: gold remains a timeless treasure in India’s economic and cultural fabric.
✨ Stay tuned for more updates on the global and Indian gold markets!