Gold demand in India rises while China falls

The two top gold-consuming countries have recently sent very different signals. While India reported a significant increase in gold imports in August, China’s gold imports fell sharply, notes Carsten Fritsch, commodities analyst at Commerzbank.

Gold demand in India is likely to fade

“According to the World Gold Council, India imported 140 tonnes of gold, which was three times more than the previous month and, based on central bank data, the highest amount in 3.5 years. The increase in imports was triggered by the steep reduction in import duty from 15 percent to 6 percent, which apparently more than offset the price increase.”

“Furthermore, purchases may have been anticipated in anticipation of the festival and wedding season. In China, the significant rise in prices has visibly dampened demand. China’s net gold imports from Hong Kong fell 76% to just over 6 tonnes in August, according to data from Hong Kong’s statistics department. The last time they were lower was in April 2022, when lockdowns caused by the coronavirus affected demand and imports of gold in China.”

“Switzerland did not export any gold to China in August, as the Swiss Federal Customs Administration reported last week. In contrast, Swiss gold exports to India rose sharply. However, given record local prices, demand for gold there is also likely to fade once the effect of the tax cut wears off.”