CaratIndia buys the dip as gold falls ten percent
Indian gold fell about 10% in June to a six-month low near 141,000 rupees per 10 grams, and buyers came back: listed jewellers logged 30-60% revenue growth, though old-gold trade-ins now fund up to 55% of counter sales.
§1When the price blinked, India bought.
When the gold price finally blinked, India bought. The World Gold Council's July read on the market records a roughly 10% fall in the domestic price during June, to about 141,000 rupees per 10 grams, its lowest in six months, tracking an 11% slide in the international price to near $4,000. Overall consumer demand stayed subdued, the council notes, but the drop was enough to pull jewelry buyers off the sidelines they had occupied through the spring's records.
The listed chains felt it first. Major organized jewellers reported revenue growth of 30% to 60% year on year for the April-to-June quarter, a number that looks heroic until the composition is examined. As much as 43% to 55% of jewelry sales were funded not by fresh money but by old gold traded back across the counter, with exchange volumes rising a further 10% to 20% after a duty change nudged households to recycle rather than import.
§2Screens take share from the safe at home.
Investment demand told a divided story. Gold exchange-traded funds took in 34.4 billion rupees of net inflows in June, the most since February, lifting holdings 2.2 tonnes to 119 tonnes, and digital-gold transaction values rose to 25.5 billion rupees. Bars and coins, the traditional hoard, cooled at the same time, a sign that the newer, screen-based ways of owning gold are quietly taking share from the safe at home.
As much as 43% to 55% of jewelry sales were funded not by fresh money but by old gold traded back across the counter, with exchange volumes rising a further 10% to 20% after a duty change nudged households to recycle rather than import.
§3The froth comes off the import bill.
The import line shows how much the froth has come off. June gold imports fell 42% from May to $1.97 billion, with volume down to somewhere between 16 and 22 tonnes from 29 tonnes, and gold's share of the country's merchandise import bill dropped to 3% from 17% in January. The domestic market even swung to a discount averaging about $20 an ounce in early July, a world away from the $150 premium of May.
This is a recycling recovery, not a demand boom, and the two are easy to confuse on a quarterly slide. When more than half of what crosses the counter is yesterday's gold coming back, revenue can grow while fresh appetite stays flat, and imports can fall while shops look busy.
India will buy every dip in gold; the open question is whether it will still buy the metal at a new high, or only the story of a bargain.
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Subscribe free →Seventy percent old gold: India's counter learns to recycle
Recycling, not imports, is funding the counter.