The upcoming festive season in India is expected to see a robust demand for gold due to the significant reduction in import duties, making prices more appealing to retail consumers. This move has provided comfort to buyers and is likely to encourage more purchases in the coming months. With higher demand in the world’s second-largest gold consumer, it could support a rally in global prices, which hit a record high recently. However, the increase in gold imports could affect India’s trade deficit and put pressure on the rupee.
According to Sachin Jain, CEO of the World Gold Council’s Indian operations, the primary beneficiaries of the reduced duty cut will be retail consumers. India lowered import duties on gold from 15% to 6% in July, a measure aimed at curbing smuggling. The demand for gold is expected to be strong during the festival season, which includes major events like Diwali and Dusherra, as well as the traditional wedding season. Retail demand has already started to pick up following the duty cut, and this momentum is likely to continue in the coming months.
Ajoy Chawla, CEO of the Jewellery division at Titan, noted that global gold prices hit a record high last week, but domestic prices in India were still below the peak. Retail consumers have become more positive about purchasing gold due to the drop in prices following the duty cut. Asher O, managing director of India Operations at Malabar Gold and Diamonds, stated that gold prices could have reached a new record high without the duty cut, but now they are trading below the peak, which is expected to drive demand further in the upcoming Onam festival.
In India, gold demand usually strengthens towards the end of the year, coinciding with major festivals and the wedding season. The duty cut has changed the sentiment among retail consumers who were holding off on purchases due to the price increase. Overall, the reduction in import duties has made gold more affordable and attractive to buyers, leading to an increase in demand. This trend is likely to continue in the months ahead, boosting the overall gold market in India and potentially impacting global prices as well.
With the festive season just around the corner, industry officials are optimistic about the outlook for gold demand in India. The reduction in import duties has made gold more accessible to retail consumers, and this is expected to drive sales in the coming months. As the world’s second-largest consumer of gold, India plays a significant role in the global gold market, and any increase in demand from the country could impact prices worldwide. Overall, the current market conditions suggest a positive trend for gold demand in India, with the potential for prices to rally further in the future.
