Gold Demand Plummets as Prices Soar to Record Highs

The demand for gold has significantly decreased across major markets due to rising prices, prompting some retail consumers to book profits. Spot gold hit a record high, driven by U.S. Federal Reserve interest rate cuts and geopolitical tensions. Demand has especially slowed in India and Europe.

The demand for gold has significantly decreased across major markets, according to industry players and analysts. The rising prices have prompted some retail consumers to sell their holdings and book profits. Spot gold reached a record $2,685.42 per ounce on Sept. 26 and has gained around 29% this year, marking the largest annual gain in 14 years. This surge has been fuelled by U.S. Federal Reserve interest rate cuts and geopolitical tensions.

In India, the world's second-biggest bullion consumer, local prices soared to record highs after import duties were slashed to combat smuggling. "Consumers are finding it difficult to cope with the price increase. Currently, we are suddenly witnessing a significant slowdown in demand," noted Prithviraj Kothari, president of the India Bullion and Jewellers Association.

In Europe, Germany remains the largest market for physical gold investment. However, high interest rates have shifted investor focus to yield-bearing assets. This year's gold price rally has further dampened demand, with imports of newly minted bars and coins shrinking by up to 80%.

(With inputs from agencies.)