Gold Demand in China and India in 2024

The gold markets of China and India, the world’s largest consumers of the precious metal, are painting markedly different pictures in 2024. Shaped by distinct economic landscapes, policy shifts, and cultural influences, the demand for gold in these two nations reveals a tale of contrasts.

India: A Resilient Market Shines Bright
India’s gold demand is flourishing against a backdrop of supportive government policies, robust economic growth, and cultural traditions that intertwine gold with celebration and savings. The reduction of import duties and declining inflation have improved affordability, while a strong monsoon season has bolstered rural incomes. As a result, total gold demand is projected to rise by an impressive 10% year-on-year, reaching approximately 750 tons.

Jewelry demand, despite a minor contraction earlier in the year due to high prices and weaker rural income, is now rebounding. The festive and wedding seasons, combined with lower gold prices, are fueling a 13% growth in jewelry demand in the second half of 2024 compared to the same period in 2023. Meanwhile, investment demand in coins and bars has surged by 42% in the first half of the year, reflecting the growing affluence and confidence of urban consumers.

China: A Market Tempered by Economic Struggles
In contrast, China’s gold market is grappling with the challenges of a slowing economy, an uncertain real estate sector, and cautious consumer behavior. While investment demand soared by 70% in the first half of the year, driven by fears over domestic economic stability and a strong rally in gold prices, this momentum has faded. In the third quarter, retail investment in gold bars and coins fell by 24% year-on-year, signaling waning enthusiasm.

The jewelry sector has faced even steeper declines, with second-quarter demand plummeting by 30% compared to 2023. Annual jewelry consumption is expected to shrink by 11% in the latter half of the year. Despite these headwinds, overall gold demand is forecast to grow modestly by 3% in 2024, totaling 896 tons.

Contributing to this slowdown are record-high local gold prices, improved sentiment towards the yuan, and heightened investor interest in alternative assets such as equities and real estate. Stimulus measures introduced by the Chinese government have further shifted focus away from gold, curtailing its traditional role as a safe-haven investment.

A Glimpse into 2025
Looking ahead, India’s gold demand is poised to remain robust, buoyed by economic optimism and enduring cultural reverence for gold. China, however, faces a more uncertain outlook. Elevated prices and growing competition from other investment vehicles may weigh heavily on retail gold purchases, even as the metal continues to serve as a hedge against global uncertainties.

The diverging trajectories of gold demand in China and India underscore the intricate interplay of economics, policy, and tradition. As these two powerhouse markets chart their distinct courses, their combined influence will continue to shape the global narrative of gold consumption.