Gold demand falls 5% in Q2 CY24; import duty cut to spur growth in Q3

Though demand for gold in India fell 5% in Arpil-June quarter of the calendar year 2024 (Q2 CY24) to 149.7 tonnes from 158.1 tonnes in the same quarter of 2023, import duty reduction and an upcoming festival season could boost sales in the coming quarter, say industry experts.

The drop in consumption is due to record-high gold prices impacting affordability and causing a slowdown in consumer purchases, says the World Gold Council, which tracks global sales of gold at wholesaler levels. However, India’s Q2 CY24 gold demand value was ₹93,850 crores, up 14% compared to Q2 CY23 (₹82,530 crores).

''Looking ahead, the recent 9% reduction in import duty on gold is expected to revive demand in the July-September quarter ahead of the main festive season, which a healthy monsoon could further boost,” says Sachin Jain, Regional CEO, India, World Gold Council. He forecasts total gold demand will be 700 to 750 tonnes for the full calendar year 2024.

Total jewellery demand in India in the second quarter decreased 17% to 106.5 tonnes compared to 128.6 tonnes in the corresponding quarter of 2023. The value of jewellery demand was ₹66,810 crore, marginally down from ₹67,120 crore in Q2 CY23.  

Total investment demand for Q2 CY24 was at 43.1 tonnes, 46% higher than 29.5 tonnes in second quarter of 2023. In value terms, gold investment demand was ₹27,050 crores, up 75% from ₹15,410 crores in Q2 2023. This increase is the highest second-quarter level since 2014 driven by expectations of further price appreciation and safe-haven buying.

Bucking global trends, India's gold recycling fell 39% to 23 tonnes, as consumers, rather than cashing in, opted for an exchange of old jewellery for new. This indicates limited distress selling, and points to highlighting gold's enduring role as a store of value in India, says the World Gold Council.

Total gold imports in India in Q2 CY24 were 196.9 tonnes, up 8% compared to 182.3 tonnes in Q2 2023. This is expected to fall following the import duty reduction in the recent budget. Industry sources say currently the difference in prices in India when compared to the Middle East is only about ₹1,000 per 8 grams of gold, compared to the ₹4,000-₹5,000 difference in the pre-budget period.