The seasonality of India's gold price premium and discount: Evidence from world gold council and MCX India

Gold holds deep cultural significance in India, driven by weddings, festivals, and key societal events. Local demand and supply dynamics influence gold prices, often deviating from international rates. This study examines India’s gold price premium and discount from 2012 to 2025 using Bai-Perron breakpoint regression. As the first of its kind, the research provides insights for policymaking, considering the policy intervention. Our empirical results indicate that India's gold market has seasonal anomalies. Findings reveal day-of-the-week, month-of-the-year, and festive anomalies, including Makar Sankranti, Akshay Tritiya, Dussehra, and Diwali. 74% of daily observations indicate that India’s gold market traded at a discount relative to international gold prices, resulting in a loss for Indian bullion traders. Empirical results show that Monday opens with a gold price premium, and Friday appears to be positive across sub-samples but marginally closes with a discount for the full sample, and December ends with a premium, while the year opens with a discount. On the other hand, the March and June-September slopes appear negative and statistically significant, indicating weak gold demand. Moreover, estimates for the first three quarters are statistically significant and traded at a discount, while the last quarter ended with a premium; this is due to festive anomalies. For India to align with global gold prices and strengthen its role in the value chain, proactive policies, transparent markets, improved infrastructure, and regulatory oversight are essential.