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INDIA GOLD DEMAND BUOYED BY IMPORT TAX CUT AHEAD OF WEDDING SEASON
(ICE) – ROMA, 26 SET – Indian gold demand looks set for a strong few months as a cut to the import tax and what’s likely to be a buoyant festival and wedding season drive purchases in the world’s second-biggest consumer of the precious metal.
Imports more than tripled to 140 tons in August from the previous month, according to the World Gold Council, as the government lowered the customs levy to 6% from 15%. The positive trend is likely to continue as a bountiful monsoon this year has brightened crop prospects, potentially boosting disposable incomes of farmers — a major consuming group.
Jewelry buying will gather pace in a couple of weeks as the world’s most-populous nation enters the festival and wedding season — when wearing and gifting gold is considered auspicious. Hindu festivities will culminate with Diwali in November, while December and January would be busy months for marriages.
“The pro-gold policy measures are positively impacting the domestic gold market,” said Sachin Jain, regional CEO for India at the World Gold Council.
The changes could help add 50 tons or more to gold demand in the second half of 2024 versus last year, he said, adding that overall requirements could be between 750 tons and 850 tons this year.
The momentum comes after inbound shipments rose just 4.8% from a year ago to 305 tons in the first half of this year, according to the commerce ministry.
The purchases reinforce the South Asian nation’s position as a global bright spot for physical consumption, at a time when jewelry purchases have tanked in the biggest buyer China. Consumers there have grappled with an economic downturn during what should be one of the busiest times of the year.
With India witnessing lower local costs, many price-sensitive buyers are now opting for heavier jewelry pieces, bucking a long-term preference for cheaper lightweight items, said Chirag Sheth, principal consultant for South India at Metals Focus. “Suddenly you’ve seen gold cheaper by 9% — and all those people who were waiting on the sidelines for the prices to drop have all rushed to the market.”
It’s not just physical gold that’s drawn attention. Net additions to Indian gold-backed exchange traded funds have been positive for four straight months, with inflows hitting a record in August, according to the WGC.
As Indians pour trillions of rupees into an increasingly hot local stock market, bullion-backed ETFs have become a portfolio diversifier for the average investor who typically trades in equities only, said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services.
In India, it’s always “touch and feel,” he said. “We go to the jewelry store, negotiate with the sellers. But for the first time, people are investing in paper gold via the ETF route. It’s a very new experience for the country.”
Read more at:
https://economictimes.indiatimes.com//industry/cons-products/fashion-/-cosmetics-/-jewellery/india-gold-demand-buoyed-by-import-tax-cut-ahead-of-wedding-season/articleshow/113683415.cms
(ICE MUMBAI)GOLD PRICES SURGE AS RURAL RECOVERY AND FESTIVE SEASON DRIVE STRONG DEMAND: WORLD GOLD COUNCIL
(ICE) – ROMA, 25 SET – New Delhi: Gold prices are witnessing a strong resurgence in both international and domestic markets, with increased jewellery buying and investment activities expected to persist, according to the latest report from the World Gold Council.
Rural demand, in particular, is showing signs of recovery. With an improved monsoon season and higher crop sowing this year, rural economic conditions are set to strengthen, which is anticipated to drive increased gold purchases, especially during the festive period.
The report highlights that gold prices continued to strengthen in September. International gold prices rose by 2.8 per cent, while domestic prices increased by 1.6 per cent over the same period. Despite these gains, Indian gold prices remain 2 per cent below pre-Union Budget levels due to a 9 per cent reduction in import duties announced in July.
Gold saw a strong performance in August, with international prices rising by 3.7 per cent and domestic prices up 3.9 per cent. This upward trend was largely driven by expectations of easing interest rates in the U.S., leading to a drop in the U.S. dollar, which further supported gold’s appeal as an investment.
Gold demand in India has remained robust, particularly following an initial surge after the import duty cut. Though demand for jewellery and bars and coins has since stabilised, industry reports suggest buying activity remains stronger than before the duty reduction.
Many purchases that were previously delayed are now materialising, with consumers showing increased interest in heavier jewellery pieces.
Looking ahead, industry participants are closely monitoring the key festive and wedding season, which runs from late August through December. Festive buying has already started strong, and the wedding season is expected to further boost sales.
Indian gold exchange-traded funds (ETFs) have witnessed a surge in investor interest since the import duty cut and changes to long-term capital gains tax for gold ETFs were announced in the Union Budget.
August saw record inflows of Rs 21 billion (~USD 238 million), significantly higher than the average monthly inflows of Rs 8 billion during the first half of 2024, according to data from the Association of Mutual Funds in India (AMFI). Net inflows for the month also reached a record Rs 16 billion (~USD 192 million).
Total assets under management (AUM) for Indian gold ETFs climbed to Rs 374 billion (~USD 4.4 billion) by the end of August, marking an 8 per cent month-on-month increase and a 54 per cent year-on-year rise. So far in 2024, net inflows into Indian gold ETFs have reached Rs 61 billion (~USD 735 million), a significant increase from Rs 15 billion during the same period last year.
These ETFs have collectively added 9.5 tons of gold this year, bringing total gold holdings to 51.8 tons, a 29 per cent year-on-year increase.
The steady inflows into Indian gold ETFs mirror global trends, driven by strong gold price performance, safe-haven demand, and reduced opportunity costs.
The Reserve Bank of India (RBI) has also continued its gold-buying spree. Data indicates that the central bank acquired 10.3 tons of gold over the six weeks leading up to September 6, bringing its total purchases for the first eight months of the year to 50 tons.
This surpasses the net gold purchases made in both 2022 and 2023, positioning the RBI as one of the world’s leading gold buyers this year……
Read more at:
https://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/gold-prices-surge-as-rural-recovery-and-festive-season-drive-strong-demand-world-gold-council/articleshow/113565184.cms?
(ICE MUMBAI)
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