Optimism in India’s Gold Market

In spite of the dramatic rise in the global price of gold, India, the world’s second-largest consumer market for the precious metal, is anticipating very strong holiday and wedding season demand for gold bullion and jewelry. That’s largely because India has slashed the import tax on gold and silver down to 6 percent from 15 percent. After India made the move over the summer, imports promptly jumped, tripling in August. And at India’s International Jewelry Show, orders from retailers were strong, in some cases hitting the highest levels in years. Also helping to boost anticipated demand is the expectation for a bountiful harvest season in India, which will help farmers afford gold purchases.

As a result, demand for gold in India is forecast to rise by more than 50 tons in the second half of the year compared to the year-ago period, according to the World Gold Council, which anticipates total purchases of more than 750 tons in 2024.

In announcing the tariff cut, India’s Finance Minister Nirmala Sithararman said the country intends to increase ownership of gold across the country, both bullion and jewelry. India buys almost all of its gold from overseas. To avoid the import duty, smugglers often hide gold in airplane baggage from the United Arab Emirates, and in vehicles crossing the border with Nepal, Myanmar, and Bangladesh.