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India's gold demand in 2024 is projected to reach its lowest since 2020, with the World Gold Council (WGC) estimating demand between 700 and 750 metric tons. A record-high domestic price, peaking at 79,700 rupees per 10 grams, has hindered purchases during the peak festive season. Although demand spiked earlier in the year due to New Delhi's import duty cuts, the subsequent price rally has led to reduced festival season buying. While physical gold investments rose significantly this year, buyers are now waiting for prices to stabilize, with many shifting from stock markets to gold exchange-traded funds (ETFs), which saw notable inflows this quarter.

Key Highlights

* India's 2024 gold demand could hit a four-year low, WGC reports.

* Festival season demand slows as gold prices reach record highs.

* Annual demand forecasted between 700-750 metric tons, lowest since 2020.

* Early purchases boosted July-September gold consumption by 18%.

* Indian gold ETFs see continuous inflows, up by 9.3 tons since January.

India's gold demand in 2024 may drop to its lowest in four years as the World Gold Council (WGC) predicts annual demand to range between 700 and 750 metric tons, down from last year’s 761 tons. This forecast aligns with domestic gold prices reaching a record high of 79,700 rupees ($947) per 10 grams, making many buyers cautious during the peak festival season. Gold buying typically surges towards the end of the year during auspicious events like Diwali and Dussehra. However, with prices elevated, many buyers who took advantage of the government’s import duty reduction in July may now be waiting for a price drop.

This price rally has contributed to an 18% rise in gold consumption in the July-September quarter, with investment demand jumping by 41% and jewellery demand up by 10%, per WGC data. ETFs saw strong inflows for the sixth consecutive month in September, with holdings increasing to 52.6 tons from 43.3 tons in January. With increased liquidation in stock markets, further inflows into gold ETFs are expected as investors look for stability in precious metals amidst price uncertainty.

For now, India's gold demand is tempered by the record-high prices, with buyers hesitant to commit in anticipation of price corrections. The trend suggests that if prices stabilize, demand may see a resurgence; however, current indications point to a low-demand environment in the final quarter.

Finally

Record gold prices may keep India’s demand low during the festival season, though ETF inflows could offer some support for overall demand.

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