India’s gold demand is set to experience significant growth, supported by a reduction in import taxes and the upcoming festive and wedding seasons, which traditionally see increased purchases. Jewelry buying is expected to pick up as the festival period approaches, with gold being considered auspicious for both wearing and gifting. According to the World Gold Council, gold imports in August surged to 140 tons, more than triple the amount imported the previous month, following the government’s decision to cut the customs duty from 15% to 6%.
This trend is expected to continue, with a favorable monsoon season improving crop yields and boosting disposable incomes among farmers, a key consumer demographic. Diwali in November and the wedding months of December and January are anticipated to be the busiest periods for gold purchases.
Sachin Jain, the regional CEO for India at the World Gold Council, indicated that the pro-gold policy measures could increase gold demand by over 50 tons in the latter half of 2024, with total demand for the year estimated between 750 tons and 850 tons. The demand surge highlights India’s growing importance in the global gold market, especially as China faces a slowdown in jewelry demand.
Additionally, Indian consumers are gravitating toward heavier jewelry due to lower local gold prices, reversing the trend of opting for lighter pieces. The increased interest in physical gold is also reflected in gold-backed ETFs, which have seen net positive inflows for four consecutive months, providing investors with portfolio diversification. Gnanasekar Thiagarajan, Director at Commtrendz Risk Management Services, noted that gold-backed ETFs are gaining traction as a key investment for those traditionally focused on equities.
