Gold Demand Drops in India Due to High Prices While Smuggling Rises

High prices caused a 29 percent drop in domestic gold demand in India during the July-September quarter compared to the same period last year. A World Gold Council report states that gold prices jumped 45 percent over the year. High import duties and a weak rupee made Indian gold prices higher than the international market, which pushed up gold smuggling into the country by 1,500 percent. Exchange of old gold also fell by 12 percent. The council expects total domestic gold demand for the full year to reach 625 to 675 tonnes. Globally, total gold demand dipped 1 percent to 1,369 tonnes due to price ups and downs, but total value rose 22 percent to 188 billion dollars. World Gold Council Regional CEO Sachin Jain noted that Indians still view gold as a long-term investment despite high prices. A slight price drop in late September revived some delayed purchases, with sales performing well in southern India due to the wedding and festival seasons.

Context

High gold prices and heavy import duties often encourage illegal smuggling because buyers look for cheaper alternatives in the grey market. India remains one of the largest consumers of gold in the world, with demand closely tied to traditional festivals and wedding seasons throughout the year.