Gold demand in April-June quarter falls 7% due to high prices 

For the rest of the year, WGC remains cautious about gold demand because it is faced with uncertainties due to elevated local prices and slowdown in discretionary spending

Demand for gold in India declined 7% year-on-year (YoY) to 158.1 tonnes in the April to June quarter due to record high prices of the yellow metal.

India’s gold demand value in the quarter was ₹82,530 crore, an increase of 4% in comparison with ₹79,270 crore in the year-earlier period, according to data released by the World Gold Council (WGC) on Tuesday. Total jewellery demand in India during the quarter decreased 8% to 128.6 tonnes and the value of jewellery demand was ₹67,120 crore, an increase of 3% YoY. Total investment demand decreased 3% to 29.5 tonnes YoY, while in value terms, gold investment demand was ₹15,410 crore, an increase of 9%, WGC data showed.  Total gold recycled in India during the quarter was 37.6 tonnes, up 61% YoY.

Total gold imports in India in the April-June quarter was 209 tonnes compared with 180.7 tonnes a year earlier, an increase of 16%.

“The demand for gold jewellery in India experienced a notable decline of 8% YoY,” said Somasundaram P.R., Regional CEO, India, World Gold Council. “The decline can be attributed to the prevailing record high rupee gold prices, which significantly impacted affordability and consumer sentiment,” he added.

During the quarter, there was a brief but notable impact on gold demand following the kneejerk reaction to the ban of ₹2,000 notes, Mr. Somasundaram said. “This highlights the sensitivity of Indian consumers to policy changes, which can have short-term effects on gold demand. While challenges related to high gold prices and inflation persisted, the supportive economic backdrop and consumer adaptability played a significant role in bolstering the market’s resilience,” he said.    For the rest of the year, WGC remains cautious about gold demand because it is faced with uncertainties due to elevated local prices and slowdown in discretionary spending.  “However, the success of the monsoon season could bolster sentiment ahead of Diwali season and throw positive surprises. With H1 2023 demand at 271 tonnes, our estimate for full-year gold demand is in the range of 650-750 tonnes in 2023,” he added.

WGC said its latest ‘Gold Demand Trends’ report revealed that the yellow metal benefited from record central bank buying in the first half of the year and was supported by healthy investment markets and resilient jewellery demand. Gold demand (excluding OTC) dropped 2% YoY to 921 tonnes during the quarter, although total demand (inclusive of OTC) was up 7% YoY, pointing to a solid gold market globally. Demand from the central bank during the quarter was down YoY to 103 tonnes, primarily by net sales in Turkey due to country-specific political and economic circumstances.  “However, central banks bought a first half record amount of 387 tonnes and quarterly demand is in line with the longer-term positive trend, indicating that official sector buying should remain strong throughout the year,” WGC said.