Gold demand in India remained robust during the July-September period of this year, showing an 18% year-on-year increase to 248.3 tonnes. This surge was primarily driven by heightened jewelry consumption and increased investments in gold, according to a report by the World Gold Council.
The Gold Demand Trends report indicated that in monetary terms, India’s gold demand rose by 52% year-on-year to ₹1.65 lakh crore, up from ₹1.08 lakh crore in the same quarter last year.
Sachin Jain, CEO of World Gold Council India, noted, “A sharp cut in gold import duties in July sparked a revival in jewelry demand, marking the strongest third quarter since 2015.”
Demand for gold jewelry climbed 10% year-on-year to 171.6 tonnes, fueled in part by wedding purchases. Jain explained, “The duty cut mitigated much of the price increase seen in August, encouraging early purchases for upcoming weddings and drawing out pent-up demand from previous quarters. Good monsoons also supported strong growth in lower-tier cities and rural areas.”
In terms of investment, demand for bullion surged 41% year-on-year to 76.7 tonnes, the highest level for the September quarter since 2012. Investor optimism and bullish expectations for prices were bolstered by the price correction following the July duty cut, which opened the market for many investors.
The report predicts that gold demand will remain strong in the fourth quarter, particularly due to Dhanteras and wedding season. However, as gold prices continue to rise, some investors may wait for price corrections to add to their holdings.
During the September quarter, the Reserve Bank of India (RBI) added 13 tonnes to its gold reserves, consistent throughout the quarter. This increase was slightly lower than the 18 tonnes added in both the January-March and April-June quarters. As of September 30, the RBI’s gold reserves reached 854 tonnes, a 6% increase compared to the end of 2023.
Meanwhile, global central bank purchases slowed by 49% year-on-year in the third quarter, totaling 186.2 tonnes. This decline was attributed to rising prices, leading some central banks to pause their purchases and engage in limited tactical selling.
The duty cuts on gold also significantly reduced smuggling, with India’s net bullion imports soaring by 111.5% quarter-on-quarter to 360.2 tonnes in July-September. Jain remarked, “Flows of smuggled gold into India have nearly disappeared thanks to the duty cut. We expect full-year gold demand to be in the range of 700-750 tonnes.”
On a global scale, gold demand rose by 5% year-on-year to a record high of 1,313 tonnes in the September quarter, with total demand exceeding $100 billion for the first time, reflecting a 35% increase in value.
The primary driver of global growth was gold exchange-traded funds (ETFs), which saw inflows of 95 tonnes. This marked the first quarter of inflows into these funds since the first quarter of 2022, a notable recovery from the outflows of 139 tonnes in July-September 2023.
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