Record high price level causes considerable slowdown in Indian Gold demand – Commerzbank

FXStreet Insights Team FXStreet

The high Gold price also has its negative aspects, Commerzbank's commodity analyst Carsten Fritsch reports.

There is a risk of a sharper price correction

"Swiss Gold exports to the most important Asian demand countries, which fell to almost zero in February, had already signalled this. News from India provides further confirmation in this regard. According to this, private households there are turning towards selling Gold jewellery and Gold coins in order to cash in on the record-high prices."

"These reached almost 90,000 rupees per 10 grams last week. Since the import tax was reduced in July 2024, the local Gold price in India has risen by a good 32%. If the current price level persists, the president of the Indian Bullion and Jewellers Association expects demand for Gold in India to fall by more than 30% this year."

"According to traders, the current wedding season is not even bringing in half the usual customer traffic for jewellers. These warning signs should not be ignored as they highlight the high reliance of the Gold price on investors. If investor interest wanes, there is a risk of a sharper price correction."

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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