India’s gold imports soared to their highest level in over three years, reaching 125 tonnes in August 2024, fueled by strong consumer demand and industry restocking ahead of the Diwali season and Q4 festive celebrations. This represents a significant 58% increase year-on-year and an impressive 212% jump from July, according to data from the World Gold Council.
Festive Demand and Tariff Cuts Drive Imports
The surge in imports comes on the back of recent cuts to import tariffs on precious metals introduced in July. These cuts provided much-needed relief to consumers who had delayed purchasing jewelry and bullion due to the rising price of gold in the first half of 2024. The tariff reductions were seen as a golden opportunity to buy, with many seizing the moment to purchase ahead of the festive season.
“Consumers who had been holding off due to high prices likely saw the tariff cuts as an invitation to spend,” said an industry insider.
Local Market Adjustments
In August, the local price of gold in India averaged a discount of $8.2 per ounce. This followed a significant swing from discount to premium pricing in late July. The market now appears more stabilized, with steady demand pushing prices above pre-tariff reduction levels. Analysts predict that any correction in the gold price could lead to further restocking by retailers, potentially keeping import volumes elevated through the rest of the year.
Rising Gold Demand in India
India, the world’s second-largest gold consumer, accounted for 761 tonnes of consumer demand in 2023. Based on current year-to-date import trends, demand for 2024 is expected to rise by approximately 10%, potentially surpassing 800 tonnes for the first time since 2015. This renewed demand comes as the country’s economy rebounds and households spend more on gold, a traditional favorite during celebrations and weddings.
Gold Price Holds Steady Amid Global Tensions
Despite escalating tensions in the Middle East over the past week, the global gold price remained relatively unchanged, consolidating around $2,650 per ounce. While geopolitical instability often drives up the price of gold, the market has remained calm in recent days, providing stability to consumers and retailers alike.
As India gears up for Diwali and other year-end festivities, the country’s gold imports are expected to remain high, supporting a thriving market that shows no signs of slowing down.
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