India’s gold demand was down 5 per cent to 149.7 tonnes during the second quarter (April-June) of calendar year 2024 amid high prices of the metal during this period, World Gold Council said on Tuesday.

Jewellery demand during the second quarter was down 17 per cent at 106.5 tonnes while investment demand was up 46 per cent at 43.1 tonnes.

However, following a duty cut in the budget, the subsequent price fall in domestic markets is expected to spur demand during the festive season with the full year gold demand estimated by the council at 700-750 tonnes.

“India’s gold demand softened slightly in Q2 2024. This can be attributed to record high gold prices impacting affordability and causing a slowdown in consumer purchases. Looking ahead, the recent 9 per cent reduction in import duty on gold is expected to revive demand in the July quarter ahead of the main festive season that begins from September. A healthy monsoon will boost sales too,” said Sachin Jain, regional CEO, India, World Gold Council.

The average quarterly price in Q2 2024 was ₹62,700.5 compared with ₹52191.6 in Q2 2023 without import duty and GST.

Jain further said that bucking the global trends, gold recycling fell 39 per cent to 23 tonnes as consumers opted for exchange of old gold jewellery rather than cashing in.Globally gold demand was up 4 per cent year-on-year to 1258 tonnes, the highest second quarter growth in the council’s data series since 2000. The growth was supported by over-the-counter transactions by central banks, including RBI which added 19 tonnes to its gold reserves during the second quarter, taking total gold reserves to 841 tonnes.

“The RBI has added gold every month so far this year, with year to date net purchases totaling 37 tonnes – more than its annual net buying in both 2022 (33 tonnes) and 2023 (16 tonnes),” the council said in its Q2 report.

“The OTC market has seen continued appetite for gold from institutional investors, high net worth investors as well as family offices, as they turn to gold for portfolio diversification. With a long awaited rate cut from the US Fed on the horizon, inflows into gold ETFs have increased thanks to renewed interest from western investors,” saud Louise Street, senior market analyst, World Gold Council.