India’s import duty cut sparks revival of gold demand, ‘just in time for the wedding season’
- Retail gold prices have fallen since the federal budget on July 23, as customers look for better deals during a generally lean buying period
For New Delhi resident Jaya Thakur, the prospect of buying gold jewellery for her son’s wedding in November kept her on tenterhooks for weeks and months as near-record-high prices of the precious metal threatened to disrupt her family’s budget.
She is thanking her stars now for not having rushed into buying, as India’s federal budget late last month slashed the import duty on gold to down to 6 per cent from 15 per cent.
“I had given only some money in advance to a jewellery shop. Now I will ask him to give me a better deal for the ornaments,” said Thakur, whose family of four lives in South Delhi’s Tughlakabad area, crammed with residential buildings overlooking narrow lanes.
India meets nearly all of its gold demand through imports, which rank second-highest in value in the country’s import bill after crude oil. The import tax was reduced to check the rampant smuggling of gold into the country, industry officials said.
Thanks to the import duty cut, gold demand in the world’s second-largest consumer India has suddenly perked up, despite instability over the recent deaths of two senior militant leaders in the Middle East stoking up international prices.
Globally, investors tend to buy into gold during times of geopolitical uncertainty as they consider gold a store of wealth. While the assassination of Hamas’ top leader Ismail Haniyeh and the strike against senior Hezbollah commander Fouad Shukur have upended attempts to defuse a Middle East powder keg, the incidents have improved the precious metal’s age-old safe-haven appeal.