Domestic oversupply widens gold price gap

• 22 carat 8 g around Rs. 362,000; 24 carat 8 g around Rs. 395,000
• Prices trending down over past two weeks

The disparity in the movement of local gold prices, as compared with international gold prices, is attributable to the current saturation of gold in the domestic market, local gold market sources claim. 

Speaking to The Sunday Morning Business, Inamul Hassan of We Buy Gold revealed that as of Thursday (12), prices in the local gold market for 22 carat 8 g (1 sovereign) was around Rs. 362,000, while 24 carat 8 g (1 sovereign) was around Rs. 395,000.

He further stated that the local gold prices had been trending down over the past two weeks after surging above Rs. 400,000 earlier this year.

“Earlier this year, the price of 24 carat 8 g (1 sovereign) gold reached Rs. 405,000, but it quickly fell,” he stated.

Hassan observed that local gold prices had previously surged to over Rs. 400,000 at a time when international gold prices stood at approximately $ 4,600 per ounce. However, despite global gold prices having since increased to around $ 5,065 per ounce, local gold prices have remained below Rs. 400,000.

He stated that this disparity between the movement of local gold prices and gold prices in the international market was attributable to an excess supply of gold in the domestic market relative to prevailing demand.

According to Reuters, the spot gold prices in the world market hit an all-time high of $ 5,594.8 on 29 January before falling sharply.

Reuters further reported that investment demand and central bank buying was expected to push gold to new records. UBS and J.P. Morgan expect gold to hit $ 6,200–6,300 by year-end, while Deutsche Bank sees bullion at $ 6,000 this year. Citi maintained its 2026 base-case forecast, expecting a first-quarter average at $ 5,000.

“Indian investors piled into gold exchange-traded funds in January as prices soared, surpassing flows into equity funds for the first time, industry data showed,” reported Reuters.

Source - The Morning