India’s gold demand is poised for a significant increase during the upcoming festive season, thanks to a substantial reduction in import duties that has made gold prices more attractive for retail consumers. This move is expected to encourage purchases and could further support a rally in global gold prices, which recently reached record highs.
The Indian government cut the import duty on gold from 15% to 6% in July, aiming to curb smuggling and stimulate market activity. Sachin Jain, CEO of the World Gold Council’s Indian operations, noted that retail consumers are the primary beneficiaries of this duty reduction.
As the festive season approaches, which includes major celebrations like Diwali and Dusherra, gold demand traditionally strengthens. Ajoy Chawla, CEO of Titan’s Jewellery division, stated that retail demand has improved since the duty cut, and this positive momentum is expected to continue.
Despite global prices hitting record highs, domestic prices in India were around 71,800 rupees per 10 grams, significantly lower than the peak of 74,731 rupees seen in July. This price adjustment has shifted consumer sentiment, with many who previously postponed purchases now likely to buy.
Asher O, managing director of Malabar Gold and Diamonds, remarked that without the duty cut, gold prices may have soared above 80,000 rupees, but the current pricing is likely to stimulate demand, especially with the upcoming Onam festival.