The recent customs duty cut announced in the Union Budget is expected to significantly boost gold demand in Bharat, making it a promising market for precious metals, according to the World Gold Council (WGC). The WGC stated, “India will likely remain a lone and tentative bright spot, boosted by the recent duty cut and healthy macro backdrop.”
As part of the budget announcements, the government plans to reduce customs duties on gold and silver to six percent and on platinum to 6.4 percent, aiming to enhance value addition in precious metal jewellery.
Reflecting the positive sentiment in the Indian gold market, the WGC report noted that Western investment demand would likely have a favourable impact in the second half of the year. India’s Q2 2024 gold demand value rose to Rs. 93,850 crores, a 14 percent increase compared to Q2 2023, which stood at Rs. 82,530 crores.
However, total jewellery demand in India for Q2 2024 decreased by 17 percent to 106.5 tonnes, down from 128.6 tonnes in Q2 2023. Overall gold demand in Q2 2024 softened slightly, reaching 149.7 tonnes, a 5 percent year-on-year decline. Despite this, the overall value of demand remained robust, highlighting gold’s enduring appeal to Indian consumers.
“H1 demand of 202t is the lowest since 2020. Despite the sharp decline in demand, the domestic economic environment remains healthy: GDP growth is forecast at 7 percent and increased sales of two-wheelers and FMCG seem to point towards recovery in the important rural sector,” the report added, showing optimism.
Jewellery demand was impacted by high local prices, declining 17 percent to 107 tonnes due to high prices, the general election, and a severe heatwave. “While festivals like Akshaya Tritiya and Gudi Padwa provided a temporary boost, record-high prices continued to dampen consumer sentiment. Conversely, investment demand surged by 46 percent to 43.1 tonnes, its highest second-quarter level since 2014, driven by expectations of further price appreciation and safe-haven buying,” said Sachin Jain, Regional CEO, India, World Gold Council.
In its Gold Mid-Year Outlook 2024 released in July, the WGC noted that gold had risen by 12 percent year-to-date, outpacing most major asset classes. This surge was primarily driven by continued central bank buying, robust Asian investment flows, resilient consumer demand, and ongoing geopolitical uncertainties.
