Gold demand in India is anticipated to remain strong during the upcoming festive season, driven by a significant reduction in import duties that has made gold prices more attractive to consumers, according to industry experts.
The import duty on gold was lowered in July from 15% to 6%, a move designed to combat smuggling and make gold more accessible. This reduction is expected to boost retail purchases as consumers take advantage of lower prices.
Sachin Jain, CEO of the World Gold Council’s Indian operations, emphasized that the primary beneficiaries of this duty cut will be retail consumers. “The upcoming festival season will see very strong demand,” Jain stated during the India Gold Conference.
India, the world’s second-largest gold consumer, typically experiences heightened gold demand towards the end of the year due to the traditional wedding season and major festivals such as Diwali and Dussehra, when buying gold is considered auspicious.
Ajoy Chawla, CEO of Titan’s Jewelry division, noted that retail demand has improved following the duty cut, which has made gold prices more favorable. This positive trend is expected to continue in the coming months.
Despite global gold prices reaching a record high last week, domestic prices in India were around 71,800 rupees per 10 grams on Monday, below the July peak of 74,731 rupees. The duty reduction has shifted consumer sentiment, which had previously been restrained by rising prices.
Asher O, managing director of India operations at Malabar Gold and Diamonds, observed that gold prices could have surged above 80,000 rupees without the duty cut. However, the current prices, still below the July peak, are likely to stimulate increased demand, especially with the Onam festival approaching next month.
