Raed why India’s gold imports and jewelry exports have recently declined. Explore the impact of high gold prices, weak foreign demand, and potential recovery strategies for 2024
Overview of Recent Trends in Gold Imports
Gold imports into India have experienced a notable decline, falling by 9% compared to the previous year. As of the current financial year, gold imports have decreased by 2.8%, totaling Rs 1,55,519 crore, down from Rs 1,80,545 crore last year. This reduction can be attributed to a combination of factors, including high international gold prices and weakening demand for jewelry among foreign buyers.
Impact of High Gold Prices and Weak Demand
The primary driver behind the drop in gold imports is the elevated price of gold in the global market. Currently, gold is trading at approximately $2,512 per ounce. This high cost is creating a deterrent for importers. Additionally, geopolitical tensions have contributed to the surge in gold prices, further exacerbating the situation.
Simultaneously, demand for jewelry from western markets has been lackluster. As a result, both the import of gold and the export of gems and jewelry have been adversely affected. The Gems and Jewelry Export Promotion Council (GJEPC) Chairman, Vipul Shah, highlighted these issues, noting that geopolitical uncertainties and high gold prices are impacting market dynamics.
Future Outlook: Potential for Recovery
Despite the current downturn, there are signs that the situation might improve. The Indian government has recently reduced the import duty on gold to 6% in the budget, which could stimulate demand. Additionally, with the festive season approaching, the demand for gold may experience a resurgence.
In India, the world’s second-largest consumer of gold after China, gold demand was around 761 tonnes in 2023 and is projected to be slightly over 750 tonnes in 2024. The price of gold in India has surged from Rs 65,000 per 10 grams in 2023 to approximately Rs 73,000 in 2024.
International Market Influences
The international gold market is also showing signs of volatility. If the US Federal Reserve decides to lower interest rates in September, gold prices may see an additional increase. Such a move would likely impact gold import trends globally, including in India.
Navigating the Challenges
The decline in gold imports and gems and jewelry exports reflects a complex interplay of high international gold prices, weak demand in key markets, and geopolitical uncertainties. However, upcoming policy changes and seasonal factors may provide a boost to the gold market. Stakeholders in the industry should stay informed and adaptable to navigate these evolving trends effectively.
By understanding these dynamics, businesses and investors can better position themselves to respond to shifts in the gold and jewelry markets.
