WGC Raises India’s Gold Consumption Forecast to 850 Tonnes for 2024 Amid Duty Cuts and Festive Demand

The World Gold Council (WGC) has increased its forecast for India’s gold consumption in 2024, raising it from 750 tonnes to 850 tonnes. This upward revision is attributed to favorable monsoon conditions and a recent reduction in gold import duty from 15% to 6%, factors expected to stimulate demand, according to John Reade, Market Strategist for Europe and Asia at WGC.

Factors Driving Higher Gold Demand in India

Reade emphasized that the jewelry sector will primarily drive the increased gold demand in India this year. The WGC expects India's gold consumption in the July-September quarter to reach 230 tonnes, a 10% increase compared to the same period last year. The demand surge is projected to continue into the fourth quarter, particularly during the Diwali-Dhanteras festive season.

Gold demand experienced a decline of 5% year-on-year in the April-June quarter to 158.1 tonnes, largely due to high import duties. However, following the government’s decision to reduce the import duty on gold in the Union Budget announced on July 23, demand quickly picked up.

Shift Towards Gold as a Financial Instrument

Reade also noted a significant shift in how gold is viewed in India, citing the growth of gold exchange-traded funds (ETFs) as a sign of gold becoming a financial instrument. "Investment in gold ETFs has shown an uptick," Reade explained. "Currently, about 50 tonnes of gold are held through ETFs in India, but this is expected to rise in the coming years."

Potential Price Swings Due to Global Factors

Reade cautioned that there could be considerable price volatility in early November around the US presidential election. Historically, gold prices have experienced fluctuations around election times. For example, the price of gold initially spiked when Donald Trump was elected but then quickly fell within 24 hours. "Gold has performed well during both Trump’s and Biden's presidencies due to a mix of policy decisions and broader global macroeconomic factors," Reade added.

India's Reliance on Gold Imports

India depends entirely on imports to meet its gold consumption needs. Any changes in international gold prices directly impact the landed price in India. This reliance on imports makes the gold market in India highly sensitive to global economic and political developments.

Read also: Apple’s New CFO....

Conclusion:

The WGC's revised projection highlights India's robust demand for gold in 2024, driven by a combination of favorable economic policies and strong festive demand. However, external factors like the US presidential election may introduce price volatility, underscoring the complex dynamics of the gold market.

[  Disclaimer:The information provided in this article is for informational purposes only and should not be considered financial or investment advice. Please conduct your own research or consult a financial advisor before making any investment decisions. The content reflects news and market trends at the time of writing and may be subject to change.  ]