India's Festive Gold Rush: Duty Cut Sparks Surge in Demand

The reduction in India's gold import duty has stimulated demand ahead of the festive season, benefiting retail consumers and keeping prices appealing. This boost in demand could influence global prices but may also expand India's trade deficit. Officials expect strong purchases during traditional wedding and festival periods.

The reduction in India's gold import duty has stimulated a robust demand ahead of the festive season, industry officials confirmed. The decrease from 15% to 6% has made prices more appealing, encouraging retail consumers to make purchases, according to Sachin Jain, CEO of the World Gold Council's Indian operations.

Higher demand in India, the world's second-largest gold consumer, could support a rally in global prices. However, it also poses risks of increasing the country's trade deficit and exerting pressure on the rupee. "The primary beneficiaries of the duty reduction will be retail consumers," Jain remarked at the India Gold Conference.

Festive demand traditionally strengthens towards the year's end, aligning with wedding season and festivals such as Diwali and Dusherra. Retail demand, now bolstered by the duty cut, is expected to maintain momentum, commented Ajoy Chawla, CEO of Titan's Jewellery division. Without this reduction, gold prices might have surged above 80,000 rupees per 10 grams, noted Asher O, managing director of India Operations at Malabar Gold and Diamonds.

(With inputs from agencies.)