Chennai Gold Jewellery Demand Recovers and ETF Flows Rebound as Bar Buying Cools

Consumer demand for gold jewellery in Chennai and across India has begun to recover since mid-June after a month-long lull, accompanied by a rebound in Gold ETF flows, according to a report by the World Gold Council. This resurgence comes alongside a cooling in demand for gold bars and coins, which are typically purchased for investment purposes.

The previous dip in jewellery purchases between mid-May and mid-June was driven by seasonally softer demand, an inauspicious period, policy measures, and a prime ministerial appeal to limit gold purchases. However, buying has picked up in recent weeks due to a pullback in gold prices, relative price stability, and promotional campaigns by retailers offering discounts, exchange offers, and flexible payment terms.

Major listed jewellery retailers reported strong revenue growth in the range of 30 to 60 per cent for the April-June quarter. This growth was supported by regional festivals, the summer wedding season, and Akshay Tritiya during the early part of the quarter, despite the subsequent inauspicious period.

Manufacturers have also experienced an increase in order bookings from retailers as they prepare for the upcoming festive season starting in August. Meanwhile, domestic gold price discounts have narrowed significantly. Discounts averaged around $20 per ounce to the landed price during the first two weeks of July, down from a peak discount of nearly $150 per ounce recorded in May following the import duty hike.

Indian Gold ETFs also recorded a rebound in June as investors bought into price dips. Net inflows during the month reached Rs 34.4 billion, marking the highest monthly inflow since February. Total holdings increased by 2.2 tonnes to reach 119 tonnes, though the cumulative assets under management fell by 8 per cent month-on-month due to declining gold prices.