India's duty cut to revive gold demand after weak June quarter, World Gold Council says

Kalyan Jewellers India

30/07/2024 07:00

By Rajendra Jadhav
       MUMBAI, July 30 (Reuters) - India's gold demand in the
June quarter fell 5% from a year ago, but consumption in the
second half of 2024 is set to improve due to a correction in
local price following a steep reduction in import taxes, the
World Gold Council (WGC) said on Tuesday.
    Higher purchases in the world's second-biggest gold consumer
could support global benchmark prices  XAU= , which are trading
near record highs.
    The recent 9 percentage point reduction in import duty on
gold, implemented before the main festival season beginning in
September, is expected to revive gold demand, further supported
by good monsoon rains, said Sachin Jain, CEO of WGC's Indian
operations.
    India last week slashed import duties on gold to 6% from
15%, a move industry officials said could lift retail demand and
help cut smuggling.
    The duty cut brought down domestic prices of gold  MAUc1 
last week to 67,500 rupees ($806.20) per 10 grams, their lowest
in four months, from a record high of 74,777 rupees earlier this
month.
    Good monsoon showers boost food grain production and improve
farmers' income. Two-thirds of India's gold demand usually comes
from rural areas, where jewellery is a traditional store of
wealth.
    "Strong gross domestic product forecasts and rural sector
recovery are all likely to support demand in the second half of
the year," WGC's Jain said.
    India's gold consumption in the April-June quarter fell 5%
to 149.7 metric tons, as a 17% fall in jewellery demand offset a
46% rise in the investment demand during the quarter, the WGC
said.
    Demand for gold from India could stand between 700 metric
tons and 750 metric tons in 2024, the lowest in four years, it
said. 
    The Reserve Bank of India continued its gold buying spree in
the June quarter, adding 19 tons, which brought its total
purchases for the first half of the year to 37 tons, more than
double the total purchased in all of 2023, the WGC said.
($1 = 83.7260 Indian rupees)

 (Reporting by Rajendra Jadhav; Editing by Mrigank Dhaniwala)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))