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India’s Gold Demand Drops 3% in 2023 amidst Soaring Prices: World Gold Council

India's gold demand

In 2023, Mumbai, India’s gold demand declined by 3 per cent to 747.5 tonnes, and if prices hold out and do not substantially fluctuate, demand could jump to 800-900 tonnes.

According to the World Gold Council (WGC) Gold Demand Trends report 2023, the country’s total gold demand stood at 774.1 tonnes in 2022.

In 2023, India’s gold demand declined by 3 percent, largely because of rising gold prices. Although consumer interest remained high, it lagged trade sentiment. In November, Diwali sales were boosted after October’s price correction during Navratri stimulated a robust consumer response.

As gold prices increased in December, demand for jewellery declined by 9 percent compared to the same period in 2022, WGC Regional CEO, India, Somasundaram PR told PTI.

On May 4, 2023, the gold price reached a new high of Rs 61,845 per 10 grams in the domestic market and USD 2,083 an ounce in global markets, and this trend continued with another high of Rs 61,914 per 10 grams in November 16.

During 2024, India’s gold demand should benefit from positive economic conditions, and if prices remain stable and not significantly volatile, there is likely to be a big spike in demand, between 800-900 tons, he said.

The subdued demand range of 700-800 tonnes since 2019 attributable to continuous rise in prices, increases in duties, stock market outperformance, the near-term elections spending impact and acceptance of elevated price levels suggests the potential for a spurt in demand in the near future.

A new round of sharp price hikes and volatility triggered by global factors could, however, pose a short-term impediment to higher demand, he said.

According to the report, India’s jewellery demand fell by 6 percent from 600.6 tonnes in 2022 to 562.3 tonnes in 2023.

WGC reported that the country’s gold investment demand increased by 7 per cent to 185.2 tonnes from 173.6 tonnes the previous year.

In the fourth quarter, bar and coin investments in India grew by 7 percent to 185 tonnes, 64% more than the five-year average.

According to Somasundaram, a correction in gold prices led to robust investment responses in the third and fourth quarters, supported by an increase in physical gold ETF interest. Total gold holdings in Indian-listed products reached a record 42 tonnes by year-end.

As a result of low and supportive prices, recycling was 20 percent higher, but at 117 tonnes, it could be considered normative.

According to the report, India imported 780.7 tonnes of gold in 2023, up 20 percent from 650.7 tonnes in 2022.

As a result of substantial inventory building by the trade, net gold imports rose by 20 percent to 780.7 tonnes in 2023.

The various Free Trade Agreements (FTAs) India has signed with many countries will boost gold imports further this year, Somasundaram noted.

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