Gold demand may increase in festive season; Retail consumer gets relief from import duty cut
Gold: Rising demand for gold in India could boost global prices, which hit a record high last week. However, rising demand for gold imports could widen India's trade deficit and put pressure on the rupee.
Gold has become more attractive following substantial cuts in import duty. This could keep the demand for gold strong in the country during the forthcoming festival season.
Sachin Jain, CEO of World Gold Council, said, that reducing import duty on gold from 15 percent to 6 percent has provided relief to retail consumers and boosted purchases. Asher O, Managing Director, Indian Operations, Malabar Gold & Diamonds, said, the duty cut has changed the sentiment among retail consumers, who were postponing purchases due to price rise. He said, that without the duty cut, gold prices could have touched new record highs above Rs 80,000, but now they are trading below the highest level.
But an increasing demand for gold in India can lead to a rise in global prices, touching a record high last week. On the other side, increasing demand for gold imports might widen the country's trade deficit and pressure the rupee. Global gold prices touched a record high last week, but their prices remained stable at around Rs 71,800 per 10 grams in the country on Monday.
