Precious Metals Market Performance
- Gold prices hit a seven-week low of Rs.145,991/10g, representing an 11% drop from the August peak of Rs.164,773/10g (p. 1).
- Domestic gold discounts narrowed to $28/oz, compared to $60/oz at the beginning of the month (p. 1).
- August silver imports rose 23% year-over-year to an estimated 505 tonnes, though the year-to-date total remains 25% lower than the previous year (p. 1).
- Indian silver ETPs recorded a third consecutive monthly inflow of approximately 54 tonnes in August, pushing total holdings past 3,950 tonnes (p. 1).
Monsoon Deficit and Regional Disparities
- India experienced a 12% rainfall shortfall between June 1 and September 26, receiving 749.2mm against a long-period average of 853.4mm (p. 1).
- East and Northeast India recorded the driest monsoon since 1901, with Bihar facing its fifth consecutive drought and 31 of 38 districts classified as rainfall-deficient (pp. 1, 3).
- Maharashtra declared drought in 265 of its 358 towns, covering 34 of its 36 districts (p. 3).
- The South Peninsula experienced its driest monsoon in 24 years, with approximately 60% of its districts receiving deficient rainfall (p. 3).
- In contrast, Odisha received 29% excess rainfall, leading to flooding and landslides (p. 3).
- Live water storage in 178 major reservoirs fell to 70% of capacity as of September 28, compared to a 10-year average of 76.6% (p. 3).
Agricultural and Rural Economic Indicators
- Kharif sowing remained relatively stable at 109.5 million hectares, just 1.2% below the previous year, shifting concerns toward crop yields for rain-fed soybean and cotton (p. 3).
- Tractor sales grew 20% year-over-year during April-August, indicating resilient mechanization spending despite the weak monsoon (p. 3).
- Agricultural input demand weakened, with April-August urea and DAP fertiliser sales falling by 5.9% and 2.5% year-over-year, respectively (p. 3).
Implications for Gold and Silver Demand
- Rural India accounts for roughly half of the country's gold and silver demand, making precious metals highly sensitive to rural cash flow disruptions (p. 5).
- Full-year gold demand is projected to decline by approximately 5% year-over-year in 2026 due to price volatility and elevated domestic prices (p. 5).
- Silver demand is forecast to drop by 13% year-over-year in 2026, driven by affordability concerns from sharp price increases (p. 5).
- While government interventions like minimum support prices and drought relief will cushion some income shocks, they are unlikely to fully offset agricultural losses (pp. 3, 5).

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