Duty cut will boost gold demand in India, anticipates World Gold Council

New Delhi [India], July 30 (ANI): The recently announced customs duty cut in the Union Budget will boost the gold demand in the country, making it a bright gold market destination, said the World Gold Council (WGC).

The WGC said, “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 anniuncements, the government will reduce customs duties on gold and silver to six per cent and on platinum to 6.4 per cent to enhance value addition in precious metal jewellery.

Exhibiting the the positive sentiment of gold market in India, the report said that the Western investment demand will positively impact the second half.

India’s Q2 2024 gold demand value was Rs. 93,850 crores, up by 14 per cent as compared to Q2 2023 (Rs 82,530 crores), as per the WGC.

Total Jewellery demand in India for Q2 2024 decreased by 17 per cent to 106.5 tonnes as compared to Q2 2023 (128.6 tonnes), according to WGC.

India’s gold demand softened slightly in Q2 2024, reaching 149.7 tonnes, down 5 per cent YoY. However, the overall value of demand remained strong, increasing by 14 per cent, highlighting gold’s enduring value for 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 per cent 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 felt the pressure of high prices, declining 17 per cent to 107 tonnes due to high local 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 per cent to 43.1 tonnes, its highest second-quarter level since 2014, driven by expectations of further price appreciation and

safe-haven buying,” Sachin Jain, Regional CEO, India, World Gold Council said.

Earlier in July, the WGC in its Gold Mid-Year Outlook 2024, said that gold rose by 12 per cent year-to-date, outpacing most major asset classes.

The major reason behind the surge were continued central bank buying, robust Asian investment flows, resilient consumer demand, and ongoing geopolitical uncertainties.