India’s gold demand to remain strong

India’s gold demand is expected to remain strong during the upcoming festive season, driven by a significant reduction in import duty.

This duty cut has made gold prices more attractive to retail consumers, encouraging them to purchase the precious metal.

As the world’s second-largest gold consumer, India’s increased demand could further fuel the rally in global gold prices, which recently reached a record high.

However, higher gold imports may also contribute to India’s trade deficit and put pressure on the rupee.

Sachin Jain, CEO of the World Gold Council’s Indian operations, emphasised that retail consumers will be the primary beneficiaries of the reduced import duty. India slashed the duty on gold from 15 to six per cent in July, aiming to curb smuggling.

Jain anticipates strong demand for gold during the upcoming festival season, which typically coincides with the wedding season and major festivals like Diwali and Dusherra.

Retail demand has already shown a positive response to the lower prices brought about by the duty cut, and this momentum is expected to continue in the coming months.

Ajoy Chawla, CEO of the Jewellery division at Titan, echoed this sentiment, stating that the duty cut has positively impacted retail consumer sentiment.

Global gold prices reached a record high last week, but domestic prices in India remained below the peak at around 71,800 rupees per 10 grams on Monday.

Asher O, managing director of India Operations at Malabar Gold and Diamonds, believes that the duty cut has prevented gold prices from reaching even higher levels.

Without the duty cut, prices could have surpassed 80,000 rupees. The current price levels are expected to boost demand from the upcoming Onam festival.

 

Attribution: Reuters

 

Subediting: M. S. Salama