Elevated living expenses and steep precious metal costs are depressing retail interest across both jewellery and asset portfolios. Agricultural distress caused by the driest monsoon in more than a decade has severely damaged rural purchasing power, which normally accounts for the majority of the nation's intake. While major religious holidays and upcoming weddings will prompt some seasonal buying, high prices and an earlier import duty hike continue to distort trade and curb overall annual volumes.
Key points
Rural communities responsible for over half of domestic demand are curtailing purchases d…: Rural communities responsible for over half of domestic demand are curtailing purchases due to weather-driven income losses.
Elevated domestic prices and higher import duties are encouraging unofficial inflows whil…: Elevated domestic prices and higher import duties are encouraging unofficial inflows while depressing legitimate foreign gold imports.
Expected seasonal demand boosts from festivals and weddings will remain too muted to reve…: Expected seasonal demand boosts from festivals and weddings will remain too muted to reverse the broader annual contraction.
Sources checked by our analysis pipeline: 1
The country, the world's biggest gold consumer after China, is grappling with rising living costs in the wake of the Iran war, while a weak monsoon could curtail rural demand for jewellery.
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Jewellery demand fell in the first nine months of the year, which will drag down total demand to around 650 metric tons, the lowest since 2020 when the COVID-19 pandemic forced jewellery shops to close, Sachin Jain, chief executive of the WGC's Indian operations, told Reuters.
Gold demand fell 29% year-on-year to 162.5 metric tons in the September quarter, as jewellery purchases declined 20% and investment demand dropped 40%, Jain said.
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Demand is likely to improve in the December quarter as key festivals such as Diwali and the wedding season drive purchases, he said.
The country celebrated Dussehra in October and will celebrate Diwali in early November, when buying…
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