India's gold demand witnessed an 18 per cent on-year growth during the July-September quarter of this year to 248.3 tonnes, as the reduction in gold import duty resulted in a revival in jewellery demand, the World Gold Council (WGC) said in a report on Wednesday.

The overall gold demand during the corresponding quarter of last year stood at 210.2 tonnes, according to the WGC's Q3 2024 Gold Demand Trends report.

However, with gold prices ruling at all-time highs, there might be an increased trend for investors to wait for price corrections. The full-year gold demand is likely to be in the range of 700-750 tonnes, slightly less than last year, as Dhanteras and wedding season is likely to boost overall gold demand.

In 2023, India's gold demand stood at 761 tonnes.

On Tuesday, gold price rose by Rs 300 to Rs 81,400 per 10 grams, near its record high level, in the national capital due to heavy demand for Dhanteras by jewellers and retailers.

In terms of value, gold demand went up by 53 per cent to Rs 1,65,380 crore during the third quarter of this calendar year, compared to Rs 1,07,700 crore in the same period of 2023.

Total jewellery demand during the July-September period increased by 10 per cent to 171.6 tonnes, compared to 155.7 tonnes in the same period in 2023.

"India's gold demand in Q3 2024, witnessed an 18 per cent year-on-year increase touching 248.3 tonnes. Sharp cut in gold import duty in July sparked a revival in jewellery demand, which posted its strongest third quarter since 2015 with 10 per cent increase to 171.6 tonnes as compared to 155.7 tonnes in Q3 2023," WGC Regional CEO, India, Sachin Jain told PTI.

Momentum in consumer demand picked up sharply in late July and remained strong until mid-September, Jain added.

Besides, reduction in gold import duty, some of the other factors that boosted India's gold demand include the continued buying streak by the Reserve Bank of India and good monsoon, acted as a catalyst for robust growth in lower tier cities and rural areas.

Going forward, Jain said, India's gold demand remains solid in the fourth quarter due to Dhanteras and wedding demand, although with the continued rise in the gold price offsetting the impact of the duty cut, there might be an increased trend for investors to wait for price corrections as opportunities to add to their holdings.

"Nevertheless, India is on course for a very strong year, as year-to-date investment is already approaching the annual totals of the past four years. We expect full year gold demand to be in the range of 700-750 tonnes," he added.

Meanwhile, the total investment demand for the July-September quarter stood at 76.7 tonnes, up by 41 per cent in comparison to 54.5 tonnes in the same period of 2023.

Total gold recycled jewellery in India in the third quarter was at 23.4 tonnes, up by 22 per cent compared to 19.2 tonnes in the corresponding period of 2023.

Total gold imports during the quarter under review was 360.2 tonnes, up by 87 per cent, compared to 193 tonnes in the same period of Q3 2023.

For the entire year 2024, gold imports are expected to be in lines with the demand, said Jain.

The report revealed that the Reserve Bank of India continued its 2024 buying streak, adding gold to its reserves every month during the quarter. RBI bought a total of 13 tonnes in Q3, marginally lower than the 18 tonnes it purchased in both Q1 and Q2 of this year.

This has increased India's gold reserves to 854 tonnes in 2024, 6 per cent higher than at the end of 2023, added the report.

"There was a sharp 41 per cent increase in investment demand to 76.7 tonnes. Bar and coin demand in India jumped to its highest third quarter since 2012. Investor optimism and bullish price expectations were accelerated by the July duty-led price correction, which allowed many investors to enter the market," Jain said.

The duty cut negated much of the rise in gold prices during August, which encouraged some early purchases for weddings scheduled over the next couple of quarters, as well as drawing out pent-up demand from previous quarters, he stated.

Jain said, good monsoons also acted as a tailwind for robust growth in lower tier cities and rural areas, which resulted in robust rise of 87 per cent in gold imports in Q3 2024.

"Flows of smuggled gold into India all but disappeared thanks to the duty cut. Moreover, India's recycling increased to 23.4 tonnes. Another consequence of the duty cut was selling by gold loan companies, which auctioned some holdings following the rupee-denominated fall in gold in order to limit losses from the non-performing loans," Jain added.

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