India and China, the two largest consumers of gold, are showing starkly different trends in their demand for the precious metal, according to Commerzbank’s commodity analyst Carsten Fritsch. While India saw a sharp rise in gold imports in August, China experienced a dramatic decline.
India’s gold imports surged to 140 tons in August, the highest in 3.5 years and three times the volume of the previous month. This spike was driven by a significant reduction in import tax, from 15% to 6%, which outweighed the price increase. Additionally, demand was likely bolstered by preparations for the festival and wedding season.
In contrast, China’s gold imports plummeted, with net imports from Hong Kong falling by 76% to just over 6 tons, the lowest since April 2022. The sharp price increase dampened demand, contributing to this decline. Notably, Switzerland, a key supplier of gold to China, did not export any gold to the country in August, as confirmed by Swiss customs data.
While India’s demand surged temporarily, Fritsch warns it may fade soon due to record-high local prices, once the effects of the tax cut subside. Swiss gold exports to India have risen sharply, but the sustainability of this demand remains uncertain as prices remain elevated.
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