FM Says Gold Demand Remains Within Traditional Trends as RBI Flags Stable External Sector

India’s gold consumption continues to follow established seasonal and cultural patterns despite elevated global bullion prices, according to government and central bank officials. 

Policymakers have indicated that while international price movements remain strong, domestic demand has not shown signs of excessive acceleration. 

Authorities also noted that external sector indicators remain stable, suggesting limited near-term macroeconomic pressure.

Government View on Gold Consumption

Nirmala Sitharaman stated that gold purchases in India remain broadly aligned with historical consumption behaviour rather than reflecting speculative demand. Speaking after a central board meeting of the Reserve Bank of India, she said household buying continues to be shaped mainly by cultural practices and seasonal trends.

She added that rising global bullion prices appear to have moderated domestic demand to some extent, as higher costs influence purchasing decisions among consumers.

Impact of Global Price Movements

According to the finance minister, the recent rise in gold prices has been sharper than typical market fluctuations seen in previous cycles. She linked the increase largely to sustained purchases by central banks worldwide, which have supported international prices even as retail demand varies across regions.

This global backdrop, officials noted, has contributed more to price dynamics than changes in India’s internal demand conditions.

RBI Assessment of Gold Imports

RBI Governor Sanjay Malhotra said the central bank continues to monitor gold imports closely but does not currently view them as a threat to macroeconomic stability. Import levels, he indicated, remain manageable and consistent with broader external sector trends.

The assessment suggests that gold inflows have not created meaningful pressure on trade balances or foreign exchange stability at this stage.

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Conclusion

Authorities maintain that India’s gold consumption remains rooted in long-standing behavioural patterns rather than excess demand. With imports stable and external sector conditions viewed as sound, policymakers currently see limited macroeconomic risk arising from gold purchases, while continuing to monitor global price developments and trade trends.

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