Despite a less-than-favorable monsoon in July and August, as well as concerns about El Nino, India’s appetite for gold increased by 10% year-over-year in the quarter ending in September, reaching 210 tonnes. Rural India played a substantial role in driving this demand, representing 60% of the country’s annual gold consumption, which is expected to range between 700-750 tonnes in 2023, slightly less than the previous year, according to the World Gold Council (WGC).
The WGC’s Q3 Gold Demand Trends report highlights that central banks globally continue to purchase gold at a historic pace, providing vital support to the precious metal. Consequently, quarterly gold demand reached 1,147 tonnes, marking an 8% increase compared to its five-year average.
Gold jewelry sales in India experienced a 7% annual growth, reaching 155.7 tonnes, primarily propelled by festive demand, with southern India showing the strongest interest. Lower gold prices played a role in this surge, as gold prices dipped from Rs. 60,000 (US$ 720.70) per 10 gm in July to Rs. 57,000 (US$ 684.67) per 10 gm in August and September, spurring increased retail demand.
The WGC anticipates a seasonal boost in demand during the October-December quarter due to festivals and wedding-related purchases. However, any substantial price increase may delay the release of pent-up demand after a relatively weak first half of the year. According to industry experts, buyers have grown accustomed to the Rs. 60,000 (US$ 720.70) per 10 gm price level, making a price decline a potential catalyst for a significant increase in demand.
Recycling of gold in India also saw an uptick, with 19.2 tonnes recycled in the September quarter, marking a 20% increase compared to the previous year’s 16 tonnes. The nation imported 220 tonnes of gold in the quarter, representing a 19% increase from the same period in the previous year.
Mr. Somasundaram P.R., Chief of WGC India, estimated that full-year gold demand would fall within the range of 700-750 tonnes, slightly lower than the previous year’s demand of 774 tonnes. He noted a 20% increase in investment gold demand, such as bars and coins, in the fourth quarter of the previous year, rising from 45.4 tonnes to 54.5 tonnes.
