India's gold demand in Jan-Mar drops by 17% due to high prices: WGC

India's gold demand in Jan-Mar drops by 17% due to high prices: WGC

In terms of value the quarter witnessed 9 per cent decline at Rs 56,220 crore, as compared to Rs 61,540 crore in the same period last year.

PTIUpdated: Friday, May 05, 2023, 02:14 PM IST
article-image
India's gold demand in Jan-Mar drops by 17% due to high prices: WGC | Image: Wikipedia (Representative)

India's gold demand during the January-March quarter declined by 17 per cent to 112.5 tonnes, as record high gold rates and high price volatility affected consumption, according to the World Gold Council (WGC).

Overall gold demand during the corresponding quarter in 2022, was at 135.5 tonnes, WGC's Gold Demand Trends Q1 2023 stated.

"India's gold demand in Q1 2023 fell 17 per cent year-on-year to 112.5 tonnes following record high and volatile gold prices. This impacted sentiment and gold jewellery demand dropped to 78 tonnes from 94.2 tonnes in Q1 2022 with little support from the investment side.

"Since 2010, barring the pandemic gap, this is the fourth time that Q1 gold jewellery demand fell below 100 tonnes," WGC Regional CEO, India, Somasundaram PR told PTI.

Why is there a drop in demand?

Sharp rise in gold prices and volatility combined with fewer auspicious days to trigger consumption, has led to many households deferring buying perhaps in anticipation of a downward price correction, he said.

"Global factors, primarily the US interest rate hikes, pushing up dollar prices coupled with rupee depreciation kept gold prices above Rs 60,000, nearly 19 per cent jump over last year. Discussions with trade indicate that purchases are through recycling old gold jewellery and lower unit purchases, latter reflecting in higher volumes on digital gold platforms that enable micro savings in gold," Somasundaram noted.

In terms of value the quarter witnessed 9 per cent decline at Rs 56,220 crore, as compared to Rs 61,540 crore in the same period last year.

Jewellery demand decreases

Total jewellery demand decreased by 17 per cent at 78 tonnes during the first quarter of 2023, compared to 94.2 tonnes in the corresponding period of last year.

The value of jewellery demand was Rs 39,000 crore, down by 9 per cent from the first quarter of 2022 at Rs 42,800 crore.

Gold investment dips

He further noted that investment demand, primarily gold bars and coins, too saw a drop of 17 per cent to 34.4 tonnes in the first quarter of 2023 from 41.3 tonnes y-o-y.

"Our forecast for the gold demand is muted for 2023 even as the economic momentum in India remains healthy and the RBI rate hike cycle has paused. The outlook for gold purchases is highly dependent on rupee prices, which show no sign of abating, and which will act as a deterrent, and of course monsoons, though the fourth quarter as always, could throw a surprise. We believe current trends point to 750-800 tonnes of demand for 2023," he said.

Investment demand

The report further noted that the total investment demand decreased by 17 per cent for the first quarter of 2023 at 34.4 tonnes in comparison 41.3 tonnes in the same period last year.

In value terms, gold investment demand in the first quarter was down by 8 per cent at Rs 17,200 crores from Rs 18,750 crores during January-March of 2022.

Total gold recycled in the country went up by 25 per cent in the first quarter at 34.8 tonnes compared to 27.8 tonnes in the same period last year.

Total net bullion imports during the first quarter were 134 tonnes, similar to the corresponding period of 2022.

RECENT STORIES

It's The Space Race Of A Different Kind: Volkswagen Tayron Revealed

It's The Space Race Of A Different Kind: Volkswagen Tayron Revealed

RBI Directs Payment Service Providers To Enhance Accessibility For Persons With Disabilities

RBI Directs Payment Service Providers To Enhance Accessibility For Persons With Disabilities

'Flats Worth ₹5 Crore Sold Like Hot Cakes': Developer Claims Sale Of 900 Units In Gurugram During...

'Flats Worth ₹5 Crore Sold Like Hot Cakes': Developer Claims Sale Of 900 Units In Gurugram During...

'He Earned The Love Of Billions': Harsh Goenka Reminisces Ratan Tata Richness Beyond Numbers

'He Earned The Love Of Billions': Harsh Goenka Reminisces Ratan Tata Richness Beyond Numbers

Pfizer Fizzes Out: From Pandemic Pandemonium To Stunted Growth

Pfizer Fizzes Out: From Pandemic Pandemonium To Stunted Growth