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Global <keyword id="19978688" type="General" weightage="100" keywordseo="gold-demand" source="keywords">gold demand</keyword> in Q2 2024, excluding over-the-counter (OTC) transactions declined by 6% year-on-year to 929 tonnes, primarily due to a sharp fall in jewelry consumption, according to the latest report of the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="261" meta.entityid="World Gold Council">World Gold Council</keyword>. However, when including <keyword id="22654356" type="General" weightage="20" keywordseo="OTC-investment" source="keywords">OTC investment</keyword>, total gold demand increased by 4% YoY to 1,258 tonnes, marking the highest Q2 figure since data collection began in 2000. The record-high <keyword id="19910265" type="General" weightage="20" keywordseo="gold-prices" source="keywords">gold prices</keyword> took a significant toll on jewelry consumption. Volumes fell 19% YoY to 391 tonnes, the lowest in four years. The report reveals a mixed picture for the Indian market in the second quarter of 2024. While overall gold demand showed a modest increase due to investment in OTC markets and central bank purchases, India witnessed trends that reflect broader market shifts. This decline reflects the impact of elevated gold prices on consumer purchasing behaviour, particularly in markets sensitive to price fluctuations, including India. <keyword id="19946830" type="General" weightage="20" keywordseo="central-banks" source="keywords">Central banks</keyword> continued to be significant players in the gold market, with net gold buying increasing by 6% YoY to 184 tonnes. This rise is attributed to the need for portfolio protection and diversification in a volatile economic environment. In June alone, central banks reported net purchases of 12 tonnes, with key contributors including the Central Bank of Uzbekistan and the Reserve Bank of India, both adding 9 tonnes to their reserves. The Monetary Authority of Singapore was noted as the largest seller, offloading 12 tonnes in the same month. The LBMA (PM) gold price averaged a record $ 2,338 per ounce in Q2 2024, up 18% YoY and 13% QoQ. Gold prices peaked at a new high of $2,427 per ounce in May. This environment drove significant investment and production trends, with total gold supply growing by 4% YoY to 1,258 tonnes. Mine production reached a record 929 tonnes for a second quarter, while recycling supply was the highest since 2012, reflecting the response to rising prices. OTC investment was a major component of the Q2 total gold demand, amounting to 329 tonnes. This, along with continued central bank buying, contributed to pushing gold prices to record highs during the quarter. Despite a minor 7-tonne decline in global gold <keyword id="19930506" type="General" weightage="20" keywordseo="etf" source="keywords">ETF</keyword> holdings in Q2, this was an improvement compared to the 21-tonne drop in Q2 2023. The decline in ETF holdings was followed by early outflows and nascent inflows later in the quarter. Retail bar and coin investment experienced a 5% decline to 261 tonnes, mainly due to weakened demand from Western markets. Conversely, gold used in technology saw an 11% YoY increase, driven by the continued growth in <keyword id="19904566" type="General" weightage="20" keywordseo="artificial-intelligence" source="keywords">artificial intelligence</keyword> (AI) applications. <keyword id="21088407" type="General" weightage="20" keywordseo="investment-trends" source="keywords">Investment trends</keyword> continued to diverge regionally. Eastern markets exhibited robust demand for bars, coins, and ETFs, while Western markets saw marked declines. However, Western ETF investment flows have shown signs of recovery in early Q3 2024. Looking ahead to the full year of 2024, it is expected that revived Western investment flows will help balance out weaker consumer demand, and potentially slower central bank buying, compared to 2023.

Global gold demand drops 6% in Q2 2024 due to slump in jewelry consumption, OTC investment pushes the total to record high

After a 10.2% increase last year, <keyword id="19910265" type="General" weightage="100" keywordseo="gold-prices" source="keywords">gold prices</keyword> are expected to rise another 9.9%, <keyword id="22706139" type="General" weightage="20" keywordseo="Infomerics-Ratings" source="keywords" meta.keywordsubtype="org" meta.entityname="Infomerics Ratings" meta.hostid="261" meta.entityid="Infomerics Ratings">Infomerics Ratings</keyword> said in a report, attributing largely to the <keyword id="20132853" type="General" weightage="20" keywordseo="Middle-East-crisis" source="keywords">Middle East crisis</keyword> involving Iran and Israel. The dragged <keyword id="20130144" type="General" weightage="20" keywordseo="geopolitical-crisis" source="keywords">geopolitical crisis</keyword> in the Middle East has spurred a rush into safe-haven assets such as gold. Historically, gold, as an asset, is considered a haven as it typically manages to retain or appreciate its underlying value in times of turbulence. "But this rise would now partly be offset by the reduced duty cut (in India)," said the Infomerics Ratings report. Historical trends, such as the surge during the Russia-Ukraine war, highlight gold's role as a safeguard against inflation and market instability during <keyword id="19982403" type="General" weightage="20" keywordseo="global-uncertainties" source="keywords">global uncertainties</keyword>. Prices of gold, considered safe investment bets, have seen a mild correction after the latest stellar bull run. Gold has been in demand for a considerable period, with its prices rallying to hit record highs now and then. Geopolitical conflict in West Asia that stretched for a long time, buying by several central banks, including the RBI, and physical demand, have altogether pushed gold prices northwards. Gold is a scarce commodity, and any mismatch in demand-supply conditions may invariably trigger a sharp price rise. "Gold's diverse uses, in jewellery, technology and by central banks and investors, mean different sectors of the gold market rise to prominence at different points in the global economic cycle. This diversity of demand and self-balancing nature of the gold market underpin gold's robust qualities as an investment asset," said Infomerics Ratings. Festive season buying, a weak dollar, uncertainty surrounding the US elections, and possible Fed rate cuts in September could raise prices, the report noted. In the wake of the presentation of the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> on July 23, 2024, by the Finance Minister, gold prices in India declined sharply. Finance Minister Nirmala Sitharaman slashed the import duty on gold from 15% to 6% in the Budget presented on July 23. Days after the Budget, gold became cheaper by Rs 6,200 in most states of India. In the capital Delhi, the price of 10 grams of 24 carat gold came down to about Rs 69,140. "With surging demand for gold, especially as the <keyword id="19896655" type="General" weightage="20" keywordseo="wedding-season" source="keywords">wedding season</keyword> approaches, gold prices are likely to rise this financial year, driven by escalating geopolitical tensions, robust central bank buying, and expectations of <keyword id="21050688" type="General" weightage="20" keywordseo="US-Fed-rate-cuts" source="keywords">US Fed rate cuts</keyword>." Infomerics Ratings report said. In India, gold has strong cultural and religious significance. As per <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="261" meta.entityid="World Gold Council">World Gold Council</keyword>, India is one of the largest consumers of gold jewellery, accounting for about 25% of global gold demand. The demand for gold in India is primarily driven by weddings and festivals, making it an integral part of the country's culture and traditions. Touching upon regulatory structure and challenges in the gold sector, the report noted that the regulatory landscape for the gold industry in India is fragmented. "The regulatory landscape for the gold industry in India is fragmented, involving multiple circulars and notifications from various authorities such as the RBI, Ministry of Finance, Ministry of Commerce, DGFT, Customs, and others. This patchwork of regulations leads to confusion, inefficiency, and difficulty in compliance, as stakeholders must navigate through numerous documents to understand the rules," the report read.

Gold shines as demand for safe haven asset strong; Infomerics Ratings anticipates 10% price jump this year

Revenues of organised <keyword id="21758362" type="General" weightage="100" keywordseo="gold-jewellery-retailers" source="keywords">gold jewellery retailers</keyword> are expected to surge by 22-25% this fiscal year, driven by the sharp reduction in import duties on <keyword id="18712" type="General" weightage="20" keywordseo="gold" source="Orion">gold</keyword> in the July Budget, according to a <keyword id="20874793" type="General" weightage="20" keywordseo="CRISIL-report" source="keywords">CRISIL report</keyword>. A recent analysis by CRISIL Ratings, which examined 58 gold jewellery retailers representing a third of the <keyword id="21165181" type="General" weightage="20" keywordseo="organised-sector" source="keywords">organised sector</keyword>'s revenues, indicates that the sector will benefit from improved <keyword id="19900859" type="General" weightage="20" keywordseo="working-capital" source="keywords">working capital</keyword> management. Although many retailers plan significant store expansions--estimated at 12-14% of existing stores--lower gold prices will reduce inventory costs, providing working capital relief. The organised jewellery sector, which accounts for just over a third of the overall market, is poised for a stronger financial performance compared to its unorganised counterpart. The steep reduction in <keyword id="20069572" type="General" weightage="20" keywordseo="import-duty" source="keywords">import duty</keyword> has come at a crucial time for the industry, as retailers prepare for the festive and marriage seasons. Following the price decline, volumes are expected to grow by 3-5% this fiscal year, reversing earlier projections of stagnant demand. Gold prices had been steadily rising since February 2024, which had subdued consumer demand and led to revenue growth driven solely by higher realisations rather than increased sales volumes. Himank Sharma, Director at CRISIL Ratings, highlighted the timely impact of the duty cut and said, "The duty cuts to their decadal lows have come at an opportune time for the gold jewellery retailers as they start stocking for the festive and marriage seasons from the latter half of August." He added, "However, the inventory losses on the existing stock due to the price cuts will be partially mitigated by the reduced spends on marketing and discounts, as demand revives. All said <keyword id="19957745" type="General" weightage="20" keywordseo="profitability" source="keywords">profitability</keyword> will see a marginal dip on-year to 7.1-7.2%." Despite the pressure on profitability, retailers' cash flows will improve due to higher revenues, enabling them to pursue expansion plans. Store expansions, expected to increase by 12-14%, will require higher inventory levels. However, the lower input costs resulting from reduced gold prices will balance out the additional working capital requirements. Gaurav Arora, Associate Director at CRISIL Ratings, added, "Gold jewellery retailers will maintain comfortable financial metrics this fiscal, with total outside liabilities to tangible net worth (TOL/TNW) and interest coverage ratios remaining around 1.0 and 9 times, respectively. These will be moderately better than our earlier expectations, keeping credit profiles stable." As the festive season approaches, gold prices remain around 17% higher than last year's average, which is expected to sustain demand and further drive revenues in the second half of the fiscal year. However, potential volatility in gold prices, changes in government regulations, and shifts in consumer sentiment will need to be closely monitored. The combination of reduced prices, increased demand, and improved working capital management is expected to keep the financial outlook for gold jewellery retailers positive, despite the slight dip in profitability. The reduced duty has caused retail gold prices to fall by Rs 4,500-5,000 per 10 grams, leading to increased demand for gold jewellery. The growth projection, 500-600 basis points higher than earlier estimates of 17-19%, is fuelled by higher volumes as more consumers are enticed by the lower prices.

Budget import duty cut will boost gold jewellery retailers' revenues by 22-25% this fiscal, notes CRISIL report

The <keyword id="21627536" type="General" weightage="100" keywordseo="gold-loan-market" source="keywords">gold loan market</keyword> in <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword> is on the cusp of substantial growth, driven by rising per-gram gold rates and increasing customer demand. Currently, the market is predominantly controlled by the <keyword id="21485305" type="General" weightage="20" keywordseo="unorganized-sector" source="keywords">unorganized sector</keyword>, which holds a 63 % share, while <keyword id="22789155" type="General" weightage="20" keywordseo="organized-players" source="keywords">organized players</keyword>, including banks and Non-Banking Financial Companies (<keyword id="19938300" type="General" weightage="20" keywordseo="NBFCs" source="keywords">NBFCs</keyword>), account for the remaining 37 %, according to a recent <keyword id="20055667" type="General" weightage="20" keywordseo="PwC" source="keywords" meta.keywordsubtype="org" meta.entityname="PwC" meta.hostid="83" meta.entityid="PwC">PwC</keyword> report. Indian households are estimated to possess approximately 25,000 tonnes of gold, valued at around Rs 126 lakh crore. Despite this vast wealth, the existing gold loan market through organized channels is valued at just Rs 7.1 lakh crore. With the market penetration of gold loans in India currently at only 5.6%, there is considerable untapped potential within <keyword id="22902023" type="General" weightage="20" keywordseo="household-gold-holdings" source="keywords">household gold holdings</keyword>. Although not all gold is available for pledging--due to factors such as religious significance, emotional value, or lack of financial need--there remains substantial opportunity for growth in the gold loan sector. The gold loan market in India has historically been dominated by the unorganized sector. However, in recent years, organised players, particularly NBFCs, have begun to gain market share. Banks, too, have been making inroads, especially through retail gold loans and a continued focus on agricultural gold loans. This shift is expected to continue as organised players leverage their formal lending structures, transparency, and customer trust to capture a larger share of the market. Shaji Varghese, CEO, Muthoot FinCorp Limited, "Gold loan assets have been growing steadily and the potential to grow further is high since a major part of the country's gold loan market is still in the unorganized sector. <keyword id="19910265" type="General" weightage="20" keywordseo="gold-prices" source="keywords">Gold prices</keyword> have been rising over the years. There is also a paradigm shift on how buying gold is perceived today. Traditionally gold was purchased for historical, cultural and societal reasons and while that continues, people have started buying gold as an investment and also as a convenient option to raise funds for financial requirements." India remains one of the world's largest consumers of gold, with total demand reaching 747 tonnes in 2023. However, this represented a 3% decrease compared to the previous year, primarily due to the surge in gold prices, which dampened demand for gold jewellery. The price of gold in India increased from Rs 55,375 to Rs 66,532 per 10 grams (22 carats) between November 2023 and May 2024, prompting a shift towards lightweight or lower-carat jewellery items. Globally, the demand for gold grew by 3 % in 2023, with China emerging as the largest market. The global market's expansion presents opportunities for Indian gold loan financiers to explore new avenues for growth beyond domestic borders. Gold's relationship with the US dollar is a key factor influencing gold prices in India. A weakening rupee often leads to an increase in gold prices, as gold is priced in USD internationally. This dynamic drives higher imports and increases the cost of gold in rupees, further fuelling demand as investors seek a safe haven against currency fluctuations. V.P. Nandakumar, Managing Director and Chief Executive Officer, Manappuram Finance Ltd, "Of late, the sharp increase in gold prices has imparted some stability to the gold loan book of most players and we do not expect gold prices to come down due to geo-political factors, the accumulation of gold by central banks as well as the lasting allure of the yellow metal." The securitisation of gold through various financial instruments offers new avenues for gold loan players to diversify their offerings. By using gold-based security as collateral, established players can introduce new loan products that leverage the intrinsic value of physical gold.

India's gold loan market set for rapid growth amid rising prices; unorganized sector holds 63% share, notes recent PwC report

<keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>'s <keyword id="19978688" type="General" weightage="20" keywordseo="gold-demand" source="keywords">gold demand</keyword> rose 8 per cent annually to 136.6 tonne in the March quarter helped by a strong <keyword id="21477327" type="General" weightage="20" keywordseo="economic-environment" source="keywords">economic environment</keyword> despite prices touching historic highs, according to the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="261" meta.entityid="World Gold Council">World Gold Council</keyword>. The aggressive gold buying by the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) also contributed to the rise in demand. India's gold demand in value terms rose 20 per cent on an annual basis to Rs 75,470 crore during the January-March period of this year on volume growth as well as a rise in quarterly average prices by 11 per cent. On Tuesday, the World Gold Council (WGC) released its global report 'Gold Demand Trends Q1 2024', showing that India's total gold demand, including both jewellery and investment, increased to 136.6 tonne in January-March this year from 126.3 tonne in the year-ago period. Out of the total gold demand, the jewellery demand in India increased 4 per cent to 95.5 tonne from 91.9 tonne. The total investment demand (in the form of bar, coin among others) grew 19 per cent to 41.1 tonne from 34.4 tonne. Sachin Jain, Regional CEO, India, WGC, said the rise in gold demand reaffirms Indians' enduring relationship with gold. "India's continued strong macroeconomic environment was supportive for gold jewellery consumption even though prices reached a historic high in March leading to a slowdown in sales as the quarter ended," he added. Jain expects the gold demand in India to be in the range of 700-800 tonne during this year. If the price rally continues, he said the demand could be at the lower end of this range. In 2023, the country's gold demand was 747.5 tonne. Asked about the factors driving demand growth in January-March, Jain told PTI, " Historically, eastern markets of the world including India and China respond when the prices are going down and there is a fluctuation, whereas western markets respond when the prices are going up." "For the first time we have seen a complete reversal where Indian and Chinese markets have responded to an increase in prices of gold," he said. Jain said the demand for jewellery as well as investment products like bar, coin and ETF has gone up. "The second reason for the increase in demand has been the buying by the central bank RBI," he said. While the RBI bought 16 tonne of gold in the full 2023, it has already purchased 19 tonne in the first quarter of this calendar year, Jain highlighted. He mentioned that the RBI has indicated that it would continue buying. Asked about the outlook for the April-June quarter, Jain said the demand might slow down due to a sharp rally in gold prices and the ongoing election process. As per the WGC data, India's gold demand in value terms rose 20 per cent to Rs 75,470 crore from Rs 63,090 crore. Out of this, the jewellery demand grew 15 per cent to Rs 52,750 crore from Rs 45,890 crore, while gold investment demand went up 32 per cent to Rs 22,720 crore from Rs 17,200 crore. The WGC also mentioned that the total gold recycled in India stood at 38.3 tonne in January-March, up 10 per cent from 34.8 tonne in Q1 2023. "Total gold imports in India in Q1 2024 was 179.4 tonne, up by 25 per cent compared to 143.4 tonne in Q1 2023," the Council said. The average quarterly price in Q1 2024 was Rs 55,247.20 per 10 gm of gold as against Rs 49,943.80 per 10 gm in Q1 2023 (without import duty and GST) "Q1'24 also saw healthy levels of gold bar and coin demand in India, up 19 per cent year-on-year at 41 tonne. This was on a par with Q1'22, which was itself the strongest first quarter since 2014," Jain said. The price correction in February sparked investors' interest, with anticipation of a rebound driving purchases, he added. "As the price rallied to successive record highs, investors remained bullish, contributing to the robust demand," Jain said. Investments into gold ETF too saw positive inflows of over 2 tonne. "Although Indian recycling volumes increased 10 per cent to 38.3 tonne in Q1'24, there were very few reports of distress selling. With a strong economy and expectations of a normal-to-good monsoon, there seems little desire to cash in on high gold prices at the moment," Jain said. The current high gold prices might temporarily put a strain on demand, he said. However, Jain said, "strong cultural and seasonal factors such as festivals, weddings helped by an expectation for a better monsoon and solid economic growth would support demand." 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India's gold demand up 8% in Jan-Mar to 136.6 tonne despite high rate

Domestic <keyword id="19910265" type="General" weightage="100" keywordseo="gold-prices" source="keywords">gold prices</keyword> have risen by 10% on a year-to-date basis on the back of the strength in global gold prices, which have surged by 18% year-to-date, driven by robust <keyword id="19894998" type="General" weightage="20" keywordseo="central-bank" source="keywords">central bank</keyword> purchases, heightened geopolitical risks, and growing expectations of a monetary policy pivot from the <keyword id="19901377" type="General" weightage="20" keywordseo="us-federal-reserve" source="keywords">US Federal Reserve</keyword>, according to the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="153" meta.entityid="World Gold Council">World Gold Council</keyword>. The reduction in <keyword id="20069572" type="General" weightage="20" keywordseo="import-duty" source="keywords">import duty</keyword> has ignited a resurgence in gold demand across <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>. Reports from the recently concluded India International Jewellery Show indicate a substantial increase in order bookings from retailers, particularly in preparation for the upcoming festive and wedding season. Manufacturers have noted that in some cases, orders have reached levels not seen in several years, underscoring the strong buying interest among <keyword id="21595593" type="General" weightage="20" keywordseo="jewellery-retailers" source="keywords">jewellery retailers</keyword> and consumers alike. The trend of bar and coin buying has also remained robust, with both consumers and jewellers capitalizing on the more attractive prices to stock up for future manufacturing needs. Historical analysis suggests that Indian consumer demand, encompassing jewellery and bar and coin demand, could see an additional 50 tonnes or more in the second half of 2024. This potential increase is fueled by a combination of an initial boost in consumer appetite due to the more attractive prices and a longer-term alignment of local prices with international rates. In a notable shift, domestic gold prices, which had been trading at a discount to international prices for five consecutive months, have now started trading at a premium following the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> announcement. The discount had widened significantly in July, reaching a peak of around $80 per ounce in the third week of the month, driven by subdued demand and an increased supply of gold through various preferential trade agreements and unofficial channels. However, wholesalers who had inventory purchased under the old customs duty regime began selling gold at a premium to the landed cost to mitigate their losses, further supported by increased consumer demand. While the premiums have moderated recently, from $28 per ounce to around USD 5 per ounce, this shift highlights the changing market sentiment and the impact of rising international gold prices and potential inventory valuation adjustments. The changes introduced in the Union Budget, including a reduction in the long-term investment holding period and a lower tax rate, have made gold ETFs a more attractive investment option. Data from the Association of Mutual Funds in India (AMFI) reveals that net inflows into gold ETFs in July amounted to Rs 13.4 billion (approximately USD 160 million), marking the highest monthly inflows since February 2020 and an 84% increase compared to June 2024. Despite these inflows, the total assets under management (AUM) for Indian gold ETFs grew marginally by 0.3% from the previous month, reaching Rs 345 billion ($4.1 billion). This modest increase can be attributed to the 8 % fall in domestic gold prices following the import duty reduction. Year-to-date, net inflows into Indian gold ETFs have totalled Rs 45 billion ($543 million), with total AUMs rising by 48 % from a year ago. The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="153" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) has continued its gold purchasing trend, although at a slower pace following a significant increase in June, when purchases reached 9.3 tonnes--the highest monthly total in nearly two years. Year-to-date, the RBI's gold acquisitions have totaled 44.3 tonnes, surpassing the total purchases of the past two years combined. The RBI's gold reserves have now reached a record 849 tonnes, representing 8.8% of total foreign reserves, compared to 7.5 % a year ago. In July, gold imports remained steady at $3.1 billion, maintaining the stable trend observed over the previous three months. Between April and July, imports averaged $3.2 billion, with volumes ranging between 43 and 47 tonnes during this period. The gold import bill for July 2024 was 11 % lower than the previous year, with an estimated 26% decrease in volume terms, around 47 tonnes. Despite a surge in international gold prices, domestic gold prices in India have experienced a notable decline, primarily due to the 9 % reduction in import duty announced in the Union Budget 2024-25. This policy change has led to a 6% decrease in the landed cost of gold, marking a shift in the domestic gold market dynamics.

Domestic gold prices surge 10% amid global price rally, central bank buying: World Gold Council

<keyword id="19895579" type="General" weightage="100" keywordseo="gold" source="keywords">Gold</keyword> consistently reduces portfolio <keyword id="19908008" type="General" weightage="20" keywordseo="volatility" source="keywords">volatility</keyword> while improving returns, even with increased <keyword id="20108512" type="General" weightage="20" keywordseo="allocation" source="keywords">allocation</keyword>. By simulating portfolio performance with varying allocations of gold (2.5% to 10%), it's evident that the yellow metal bolsters return without adding significant risk, according to the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="261" meta.entityid="World Gold Council">World Gold Council</keyword>. On the other hand, <keyword id="19899404" type="General" weightage="20" keywordseo="bitcoin" source="keywords">Bitcoin</keyword> shows diminishing returns as its allocation increases. A 2.5% allocation of bitcoin can enhance risk-adjusted returns, but beyond that, the portfolio's volatility rises, leading to larger drawdowns and lower overall performance. The data underscores that while bitcoin may offer short-term upside, it introduces risk that erodes its effectiveness as a stable <keyword id="22820244" type="General" weightage="20" keywordseo="store-of-value" source="keywords">store of value</keyword>. Global equities experienced a sharp downturn, with the <keyword id="19919944" type="General" weightage="20" keywordseo="SP-500" source="keywords" meta.keywordsubtype="org" meta.entityname="S&amp;P 500" meta.hostid="261" meta.entityid="S&amp;P 500">S&amp;P 500</keyword> and <keyword id="19951906" type="General" weightage="20" keywordseo="NASDAQ" source="keywords" meta.keywordsubtype="org" meta.entityname="NASDAQ" meta.hostid="261" meta.entityid="NASDAQ">NASDAQ</keyword> dropping over 4% and 6%, respectively, at the peak of the selloff. Amid this volatility, the debate over whether bitcoin can be considered "digital gold" resurfaced, as investors re-examined its place as an inflation hedge and a store of value. While bitcoin enthusiasts often label the cryptocurrency as "digital gold," a closer examination of the data, particularly during turbulent market periods, challenges this claim. Gold, a time-tested asset known for its stability, has long been a <keyword id="20466459" type="General" weightage="20" keywordseo="safe-haven" source="keywords">safe haven</keyword> during <keyword id="22820245" type="General" weightage="20" keywordseo="market-downturns" source="keywords">market downturns</keyword>. Bitcoin, on the other hand, displays characteristics more akin to high-risk technology stocks, making it an unsuitable substitute for gold in times of market stress. The primary distinction between gold and bitcoin lies in volatility. On a five-year rolling basis, gold has proven to be far less volatile than bitcoin, a trend that underscores its role as a safe haven asset. Gold's stable value is supported by central bank holdings, long-term investment demand, and its status as a global store of wealth. Bitcoin, conversely, is at the extreme end of the volatility spectrum, with its price fluctuations resembling those of tech stocks--closely tied to blockchain adoption and innovation trends. The most recent market correction in early August 2024 further emphasized these differences. While bitcoin experienced sharp losses, gold remained relatively stable, reinforcing its value as a risk mitigator during crises. The comparison of year-to-date returns reveals the stark contrast: bitcoin's wild swings have made it less reliable for investors seeking protection in a turbulent market. Bitcoin and gold also show stark differences in their correlation with broader markets. Gold has historically exhibited a negative correlation during down markets, and a positive correlation during up markets, making it an ideal asset for a diversified portfolio. Bitcoin, on the other hand, behaves more like risk assets, amplifying market stress rather than mitigating it. This was especially evident during the Russian invasion of Ukraine in 2022, when gold outperformed while bitcoin faltered, aligning with other high-risk equities. Gold's global acceptance as a store of value--unrestricted by geographic or regulatory boundaries--provides further stability. Bitcoin, while growing in prominence, has not demonstrated the same universal acceptance or reliability, particularly during significant market downturns. The critical takeaway from the events of early August 2024 is that bitcoin has yet to demonstrate the same safe haven characteristics as gold. In times of significant market drawdowns, bitcoin has tracked risk assets like tech stocks, offering no meaningful protection for investors seeking stability. This reinforces the notion that bitcoin's most common use case is as an indicator of blockchain adoption rather than a dependable hedge against inflation or market turmoil.

Gold boosts returns and lowers risk, while Bitcoin heightens volatility, says World Gold Council

<keyword id="19910265" type="General" weightage="100" keywordseo="gold-prices" source="keywords">Gold prices</keyword> have corrected sharply by 7% or Rs 5,000 per 10 grams in the local markets after the government slashed the basic customs duty on gold. Lower costs will encourage more people to invest in the yellow metal, both as a commodity and as a financial asset, experts say. Analysts said customs duty cut has made gold imports cheaper. The move will help curb the rampant issue of gold smuggling, leading to growth in the organised <keyword id="22107284" type="General" weightage="20" keywordseo="jewellery-sector" source="keywords">jewellery sector</keyword>. "The cut in basic <keyword id="20330317" type="General" weightage="20" keywordseo="custom-duty" source="keywords">custom duty</keyword> on gold prices makes the yellow metal cheaper. While this can lead to weaker market sentiments due to the sudden change, <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword> stand to benefit from the new, more attractive pricing for gold," said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities Echoing similar sentiments, Krishnan R, Director &amp; CEO of Unimoni Financial Services said lower costs will encourage more people to invest in gold, both as a commodity and as a financial asset, which is often seen as a hedge against inflation and currency devaluation. Following the <keyword id="19936553" type="General" weightage="20" keywordseo="budget" source="keywords">budget</keyword> announcement by finance minister Nirmala Sitharaman that the government has slashed basic customs duties on gold and silver from 15 per cent to 6 per cent, gold prices crashed by Rs 3,350 to Rs 72,300 per 10 grams in the national capital on Tuesday. The precious metal prices continued the downtrend and plunged by Rs 650 on Wednesday. The yellow metal rates saw another steep fall on Thursday, nosediving by Rs 1,000 to settle at Rs 70,650 per 10 grams, as per the All India Sarafa Association. After the duty cut, the yellow metal has declined Rs 5,000 per 10 grams or 7.1% in the past three sessions, since July 23 when it had fallen Rs 3,350 to end at Rs 72,300 per kg. Also, gold of 99.5% purity declined by Rs 1,000 to Rs 70,300 per 10 grams on Thursday. It had also lost ground by Rs 5,000 per 10 grams in the previous three sessions. On Thursday, silver rates also lost ground by Rs 3,500 per kg to Rs 84,000 per kg. In the past three sessions, the rates of the bright metal fell sharply by Rs 7,000 or 8.3% to Rs 84,000 per kg from Rs 91,000 per kg. Traders also said that a sharp correction in gold prices have revived the demand for jewellery among consumers as they flocked to jewellery outlets to take advantage of lower prices. "The reduction in basic custom duties have spurted the demand for jewellery in the domestic markets. Further, this will act as a sales booster for jewellers before the festive seasons, encouraging fresh buying by the consumers due to lower prices," PC Jeweller's Managing Director Balram Garg. Low gold prices will help domestic jewellers, particularly the organised ones, Garg said. According to MP Ahammed, Chairman, Malabar Group, the reduction has been a long-standing demand of traders in the gold sector, as it is expected to curb the rampant issue of gold smuggling, which poses a substantial threat to the Indian economy. "With the new rates, the duty on one kilogram of gold drops from Rs 9.82 lakh to Rs 3.93 lakh, making smuggling less attractive and more manageable. "This move will help dismantle the mafia chain involved in smuggling, leading to growth in the organised jewellery sector and increasing government revenue through GST and income tax," Ahammed said. Meanwhile, in futures trade on the <keyword id="20316358" type="General" weightage="20" keywordseo="multi-commodity-exchange" source="keywords">Multi Commodity Exchange</keyword> (MCX), gold futures have partially recovered on Friday, after three days of slump. The most traded August contract jumped Rs 288 to Rs 67,750 per 10 grams on the MCX. It had settled at Rs 67,462 per 10 grams in the previous session on Thursday. However, silver contracts for September delivery continued its downward trend by declining Rs 241 to Rs 81,090 per kg. It had closed at Rs 81,331 per kg in the previous session on Thursday. Experts anticipate stability in bullion prices once there is clarity on several economic and political factors such as interest rate cut by the <keyword id="19901377" type="General" weightage="20" keywordseo="us-federal-reserve" source="keywords">US Federal Reserve</keyword>. "Stability in gold prices is expected once there is clarity on several economic and political factors including, potential interest rate cuts in the US and India, and the outcome of the US Presidential elections will provide a clear direction for gold prices," Trivedi said.

Gold prices drop by Rs 5,000/10gm post Budget; bring cheers to retail investors

Mumbai, <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s gold demand witnessed on-year decline of 3 per cent at 747.5 tonnes in 2023, and going ahead the spurt in demand could be anywhere between 800-900 tonnes, if prices hold out and are not significantly volatile, the <keyword id="20195223" type="General" weightage="20" keywordseo="world-gold-council" source="keywords">World Gold Council</keyword> said in a report. The country's total gold demand stood at 774.1 tonnes in 2022, according to the World Gold Council (<keyword id="20256712" type="General" weightage="20" keywordseo="wgc" source="keywords">WGC</keyword>) Gold Demand Trends report 2023. "India's gold demand in 2023 declined by 3 per cent to 747.5 tonnes, strongly influenced by rising gold prices. Although consumer interest remained high, it lagged trade sentiment. October's price correction during <keyword id="20023931" type="General" weightage="20" keywordseo="navratri" source="keywords">Navratri</keyword> stimulated a robust consumer response, boosting Diwali sales in November. "However, demand declined in December as gold prices resumed an upward trend, resulting in a 9 per cent drop in fourth quarter jewellery demand compared to the same period of 2022," <keyword id="20399154" type="General" weightage="20" keywordseo="wgc-regional" source="keywords">WGC Regional</keyword> CEO, India, Somasundaram PR told PTI. Price of gold was volatile throughout 2023, with the yellow metal reaching a new high of Rs 61,845 per 10 gm on May 4 in the domestic market and USD 2,083 an ounce in global markets, and this trend continued with the precious metal reaching another high of Rs 61,914 per 10 grams in November 16. Looking forward to 2024, India's gold demand should benefit from ongoing positive economic conditions and if the prices hold out are not significantly volatile there is likely to be a big spurt in demand which could be anywhere between 800-900 tonnes, he said. "The subdued demand range of 700-800 tonnes since 2019 attributable to continuous rise in prices, increase in duties, stock market outperformance, near-term elections spending impact and acceptance of elevated price levels, suggest the potential for a spurt in demand in the near future. However, any short-term impediments to higher demand could arise from another round of sharp price hikes and volatility triggered by global factors," he added. The total jewellery demand in India dropped by 6 per cent to 562.3 tonnes in 2023, compared to 600.6 tonnes in the previous year, the report stated. Meanwhile, the total gold investment demand in the country grew by 7 per cent to 185.2 tonnes, compared to 173.6 tonnes in the previous year, the WGC report said. "Bar and coin investment in India rebounded, growing by 7 per cent to 185 tonnes year-on-year. The fourth quarter demand touched 67 tonnes, 64 per cent above the five-year quarterly average. "The correction in gold prices led to some robust investment responses in third and fourth quarters, supported by increased interest from physically backed gold ETF investors, setting total holdings in Indian-listed products to a record 42 tonnes by year-end," Somasundaram said. He said that recycling was 20 per cent higher due to low and supportive higher prices but at 117 tonnes, could be considered the normative expected level. Total gold imported to India in 2023 was 780.7 tonnes, up by 20 per cent compared to 650.7 tonnes in 2022, according to the report. "Net gold imports surged by 20 per cent to 780.7 tonnes in 2023, primarily due to substantial inventory building by the trade. "In 2024, gold imports are likely to be higher than the demand. The various Free Trade Agreements (FTAs) India has inked with many countries are expected to boost gold imports further this year," noted Somasundaram.

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