Indian gold demand aided by the recent budget

Indian gold demand aided by the recent budget

Recently, World Gold Council (WGC) published the Gold ETF Commentary, Western activity picked up in July report. Further in their; July in review, the WGC suggest that global physically-backed gold ETFs1 have now seen inflows three months in a row, adding US$3.7bn in July.

Notably, all regions reported positive flows this month with Western gold ETFs contributing the most. A combination of the July inflow and a 4% rise in the gold price pushed total global assets under management (AUM) 6% higher to US$246bn, a new month-end record.3 Collective holdings concluded July with a 48t increase, reaching 3,154t.

Successive inflows over recent months have narrowed the y-t-d loss in global gold ETFs to US$3bn. And while collective holdings have fallen by 72t (-2%) so far in 2024, their total AUM rose by 15%, supported by a 17% increase in the gold price. European and North American funds remain on the red for the year despite the change in trend while Asia has recorded sizable inflows.

Asia extended its inflow streak to 17 months, attracting US$438mn in July. India led inflows. Strong Indian demand was mainly aided by changes announced in the recent budget which effectively shortens the long term investment qualifying time period and lowered the associated tax rate which makes the investment landscape for gold ETFs more equitable and attractive.

A strong gold price in the local currency also helped. Net inflows were also observed in China and Japan – likely driven by similar factors namely equity market weaknesses and strong local gold price performances in the month.