Cailian News on September 26th (Editor Liu Rui) As the international gold price continues to hit new highs approaching $2700, the total market value of physical gold worldwide has also exceeded the $20 trillion mark for the first time.

And in the coming months, global gold demand is expected to remain strong. This is because India, the world's second largest gold consumer, recently reduced import taxes, and with traditional festivals and wedding season approaching in India, this will drive India's gold purchasing volume to remain strong.

India's gold consumption peak season is approaching.

Data from the World Gold Council shows that due to the Indian government reducing the tax rate from 15% to 6%, India's gold imports in August more than doubled from the previous month to 140 tons.

This positive trend may continue, as this year's ample monsoon is optimistic for India's crop prospects, which may increase disposable income for farmers – who are the main gold consumer group in India.

In addition, India is about to enter the traditional festival and wedding season, and Indians have a tradition of wearing and gifting gold during festivals, which means India's gold jewelry sales are expected to accelerate in the coming months.

India's festival celebrations are expected to peak during the Diwali festival in November, while December and January will be India's traditional wedding season.

Sachin Jain, Chief Executive Officer of the World Gold Council in India, stated: "Supportive policy measures for gold have had a positive impact on the domestic gold market."

Tariff reductions stimulate gold consumption demand in India.

Data from the Indian Ministry of Commerce shows that the import volume of gold in India in the first half of this year increased by only 4.8% compared to the same period last year, reaching 305 tons.

However, Jain from the World Gold Council believes that policy changes such as the reduction of tariffs in India may increase India's gold demand by more than 50 tons in the second half of 2024 compared to last year, and may lead to a total gold demand for the whole year between 750 and 850 tons.

Chirag Sheth, Chief Advisor of Metals Focus in South India, stated that with the decrease in the cost of buying gold in India, many price-sensitive buyers are now starting to choose jewelry with higher gold weight instead of their previous preference for lower weight jewelry due to cheaper prices:

"Suddenly, you see a 9% drop in gold prices, and all those who were waiting off-market for a price drop rushed into the market."

Record high inflow of funds into gold ETFs in India

What attracts attention is not only physical gold. Data from the World Gold Council shows that India's gold ETFs have seen net fund inflows for 4 consecutive months, reaching a record level of inflows in August.

The recent surge in the Indian stock market may be providing a boost to the inflow of funds into India's gold etf. With the Fed's rate cut finally materializing, both the Indian SENSEX index and the Indian NIFTY index have been steadily rising to new all-time highs.

Gnanasekar Thiagarajan, head of Commtrendz Risk Management Services, stated that as Indians pour trillions of rupees into the increasingly hot domestic stock market, gold etfs have become a diversification tool for ordinary investors who typically only trade stocks.

He mentioned that in India, people were used to the traditional way of "touch and feel", where they would usually visit jewelry shops and negotiate with gold sellers. But now, for the first time, people are investing in paper gold through etfs. This is a completely new experience for the country.