ETFs | Mines to Market

The price of domestic gold jewelry witnessed a 2.6% hike in May. It is 19.6 % higher than in the previous year. Jewelry stores in Kochi reopened on 18th May. Daily sales, reported being around 60-70% in May. However, the majority of the sales were for the delivery of jewelry against advanced bookings made a few months ago. In Tamilnadu, the state government allowed only small jewelers without air-conditioning to open. Large jewelry stores in the mall remained closed. During May, jewelry stores in Coimbatore remained closed. Coimbatore and Thrissur witnessed resumed jewelry manufacturing activities. In Chennai, small jewelry stores opened. Karnataka, jewelry stores reopened early in the month and recorded average daily sales around 25-30 %. Daily sales in other parts of the country In Mumbai and Ahmedabad jewelry stores remained closed due to rising COVID-19 cases. PN Gadgil & Sons, PNG Jewellers, and Waman Hari Pethe reported better sales as compared to single standalone stores. North and eastern region jewelry retailers reported daily sales of 20-25% as compared to previous years. Consumers turning to gold recycling Amid COVID-19, a significant jump in gold recycling volumes anticipated as consumers turning to gold loans against jewelry. However, gold loans increased modestly in the month to meet liquidity needs. Meanwhile, banks have rolled out attractive gold loan schemes for individuals and small businesses. Inflows into gold-backed ETFs The MCX Gold Spot (995 fineness) in INR ended the month at 2.6%. It is higher than at the end of April. It has outperformed the LBMA Gold Price AM in USD ( +0.5%) over the same period. The volatility index in the equity market rose sharply to 43.7% on 4th May from 34% at the end of April. Rising volatility coupled with a higher gold price luring investors towards gold-backed ETFs. Inflows into gold-backed ETFs rose by Rs 8.15bn in May. In April the inflow was of Rs 7.3bn Discount narrowing down to mild pick up in sales The average discount in the local market narrowed to the US $ 28-30/oz from the US $40/oz by the end of the month, due to mild pick up in sales activity. Three banks nominated agencies and exporters imported 1.83t of bullion of gold. One refinery imported 0.4t of gold dore (fine gold content). A total of 1.9t of gold imported in May. RBI stepped up its gold purchase Between February and April, RBI added 19.9 t of gold, taking its total gold reserves to 654.9t by the end of April 2020.

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