Gold Demand Falls in India Amid Record Consumption

India's gold demand declined by 6% year-on-year to 131.4 tonnes during the April-June quarter, according to the World Gold Council (WGC). The decline in volumes was attributed to higher prices, increased customs duty, and a seasonally weak jewellery buying season. Despite this, the value of gold consumption surged 50% to a record Rs 1.98 lakh crore, indicating consumers' willingness to buy gold at elevated prices.

The WGC Regional CEO (India) Sachin Jain stated that the slowdown was driven by a subdued buying season and the increase in customs duty. Prime Minister Narendra Modi's appeal to reduce non-essential gold purchases also had an impact on consumer demand. Jewellery demand fell 15% to 75.1 tonnes, while investment demand remained resilient.

The WGC expressed concern over the possible rise in gold smuggling following the customs duty hike. Gold imports during the quarter declined by 23% to 98.1 tonnes, and recycled gold supply fell by 17%. The WGC described illicit trade as one of the biggest risks facing the industry.