Gold Prices in India Surge 4.1% in May Amid Global Decline, Says WGC
Gold prices in India defy global trend, rise 4.1% in May: WGC
Image: Asianet Newsable
In May, gold prices in India increased by 4.1%, contrasting with a 1.4% decline globally, according to the World Gold Council. The rise is attributed to local currency weakness and geopolitical tensions, despite calls from Prime Minister Narendra Modi for citizens to delay gold purchases to stabilize the market.
- 01Gold prices in India reached a year-to-date return of 17.6% as of May 29.
- 02The global price of gold ended May at USD 4,546 per ounce.
- 03Demand from major markets like India and Turkey provided support even amid expectations of US interest rate hikes.
- 04Prime Minister Narendra Modi urged citizens to postpone gold purchases due to regional conflicts affecting supply chains.
- 05The World Gold Council noted that historical data shows gold often performs well following US Federal Reserve rate hikes.
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According to the World Gold Council's latest report, gold prices in India rose 4.1% in May, diverging from a 1.4% global decline. The report indicates that gold ended the month at USD 4,546 per ounce, with India and Turkey being notable exceptions to the downward trend. The increase in India's gold prices is attributed to local currency weakness and geopolitical tensions, particularly in West Asia. Despite Prime Minister Narendra Modi's recent appeal for citizens to delay gold purchases to maintain market stability, the year-to-date return in the Indian market stands at 17.6%. The report also highlights that while there are expectations of potential interest rate hikes by the US Federal Reserve, demand from major gold-consuming markets like India is expected to provide ongoing support for gold prices. However, the council cautioned about near-term challenges, including signs of weakening demand in some physical markets and subdued global gold ETF flows in May.
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The rise in gold prices could affect consumer spending and foreign exchange reserves in India, as gold imports constitute a significant portion of foreign exchange outflow.
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