The price of gold in the country has increased by 4.2% (Rs 2,985/gram) in a month to Rs 74,093 per ten grams. After the import duty was reduced in the budget, the price has increased more than the reduction. Despite this, experts believe that the demand for gold will set a record during the festive season.
Due to reduction in import duty, it has become easier to import gold from abroad. It is reaching all the jewelers of the country. According to an estimate, the demand for gold will increase by more than 30% this festive season. After the reduction in import duty on gold in the general budget, India's gold imports have increased more than three times in August.
According to the Commerce Ministry, imports in August stood at $10.06 billion (Rs 84,453.7 crore) on a monthly basis, compared to $3.13 billion (Rs 26,276.35 crore) in July. The main reason for this increase is the festive season. There is a hope of huge demand in this. The import duty on gold was 15%, which was reduced to 6% in the budget.
Demand for gold will remain high during the festival According to experts, due to the fall in prices in the global market, it is expected that the demand for gold will remain high during the festival. The reason is that now most of the gold will come to India through legal routes. Vipul Shah, Chairman of Gems and Jewellery Export Promotion Council, says, 'Due to the reduction in import duty, the inflow of gold from abroad has increased.'
42 lakh marriages by December will increase the demand According to the Confederation of All India Traders (CAT), 42 lakh weddings are going to take place in November-December. About Rs 5.5 lakh crore will be spent on this. Jewellery is one of the three major sectors which will get a major share of this expenditure.
Coins and rods are also in demand along with jewellery Anuj Gupta, Commodities and Currency Head, HDFC Securities: The dollar has weakened due to the unexpected 0.5% reduction in interest rates by the US Fed. In such a situation, other asset classes including gold have suddenly started shining. The festive season is going to be in full swing after Navratri. In such a situation, there seems to be a huge demand for gold.
People want to buy gold coins and bars along with jewellery. The demand for gold in the country during the festive and wedding season can be up to 30% more than last year. Investors are also withdrawing some money from the country's stock markets and buying gold, so that in case of correction in the market, they can secure part of their investment in the form of gold.
Demand for gold ETF increased Investment in gold exchange traded funds (ETFs) is also increasing. Net inflow in ETF gold in the country increased by 80% in July from June to Rs 13,400 crore. This month the total investment was Rs 14,600 crore, but there was a withdrawal of Rs 1200 crore.
This is the largest investment in ETF in any one month in four and a half years after February 2020. According to RBI, the trend of investing in gold will continue in future as well. Till August, RBI bought 8.2 tonnes of gold and the bank's purchase for the whole year reached 44.3 tonnes. This is the highest in two years. The total gold with RBI has now reached 849 tonnes.
Graphics Source: VaskarAssets
