Gold demand in India is poised to surge during the upcoming festive season, following a significant reduction in import duties that has made gold more affordable for consumers. The duty cut, which reduced the import tax from 15% to 6% in July, is expected to stimulate robust buying as the country enters its peak wedding season and major festivals such as Diwali and Dussehra.

The lower import duty has provided relief to retail consumers, boosting their confidence and encouraging purchases. This surge in demand could potentially support a rally in global gold prices, which recently reached record highs. However, increased gold imports may widen India’s trade deficit and put pressure on the rupee.

Sachin Jain, CEO of the World Gold Council’s Indian operations, highlighted that the primary beneficiaries of the duty cut are retail consumers. Jain predicted strong demand during the festival season, a time traditionally associated with heightened gold buying due to its auspicious nature.

Retail interest in gold has strengthened since the duty reduction, with prices in India now hovering around 71,800 rupees per 10 grams, down from July's record high of 74,731 rupees. Ajoy Chawla, CEO of Titan’s Jewelry division, noted that the duty cut has improved retail demand and expects this positive trend to continue.

Asher O, Managing Director of Malabar Gold and Diamonds, observed that the duty cut has altered consumer sentiment, which had previously led to postponed purchases due to high prices. Without the duty reduction, gold prices could have surpassed 80,000 rupees, but the current levels are expected to spur increased buying for upcoming festivals, particularly the Onam festival next month.

Overall, the reduction in gold import duties is set to invigorate the Indian gold market, encouraging festive purchases and potentially influencing global price trends.