India’s gold demand plummeted to a six-year low (excluding Covid in 2020), dropping by 17% in the March quarter to 112 tonnes compared to 135 tonnes in the same period last year. The decrease is attributed to the skyrocketing gold prices. In terms of value, it dipped by nine per cent to ₹56,220 crore (₹61,540 crore).
Jewellery demand also hit a six-year low, decreasing by 17% to 78 tonnes (from 94 tonnes). In value terms, it slipped to ₹390 crore (₹428 crore). Investment demand was also low at 34 tonnes (41 tonnes).
The price hike prompted consumers to recycle their old gold, resulting in a 25% increase in recycled gold at 35 tonnes (30 tonnes). Bullion imports remained flat at last year’s level of 134 tonnes, while imports of impure gold (dore) fell by 41% to 30 tonnes (52 tonnes).
The retail price of gold rose by 26%, reaching ₹63,000 per 10 grams in the March quarter, as compared to an average price of ₹49,977 last year.
RBI adds glitter to its reserve
The Reserve Bank of India (RBI) continued to add gold to its reserve for the fifth consecutive year, buying seven tonnes to reach a total holding of 796 tonnes. Other central banks, including those of Singapore, China, Turkey, and Russia, have also been increasing their reserves due to concerns over stagflation in the US and the ongoing Russia-Ukraine crisis.
Somasundaram PR, Regional CEO (India) of the World Gold Council, stated that gold jewellery demand fell below the 100-tonne mark for the fourth time since 2010, excluding the pandemic period. This drop in demand can be attributed to the sharp rise in gold prices, which increased by nearly 19% over last year due to global factors such as US interest rate hikes and rupee depreciation.
The World Gold Council expects gold recycling to surpass 100 tonnes given the high prices. Gold demand is expected to recover in the December quarter as economic uncertainty subsides. However, overall gold demand for the year is projected to remain muted, similar to last year’s level of 774 tonnes, depending on the rupee-dollar value.
Somasundaram also commented on the implementation of the Hallmark Unique Identification number, stating that it will become a reality sooner than later. However, the industry may delay the roll-out as consumers are hesitant to purchase non-hallmarked jewellery, especially with gold prices hovering above ₹63,000 per 10 grams.
Published on May 5, 2023
