Gold jewellery demand in India was 95t, 4% above in the Q1 2024 comparatively weak Q1’23. India’s continued strong macroeconomic environment was supportive for gold consumption. Rural demand is now seeing similar growth to that of urban India; in recent quarters it lagged behind as it struggled to shake off the effects of the pandemic.
The early improvement in demand was evident in the local gold price, which moved to a premium in late January until late February, before reverting sharply to a sizable discount in March as the surging price choked off demand. The prospect of impending elections likely further contributed to the March slowdown, as gold consumption tends to decline during these periods.
In response to the higher prices, 18K diamond jewellery saw some improvement, as did jewellery with coloured gemstones. Recycling activity also increased in reaction to the price rise, as is typical in price-sensitive markets like India.
Demand remains weak so far in Q2, reflecting continued record highs in the gold price. Stock-building in preparation for Akshaya Tritiya and the forthcoming wedding season are reportedly muted. But in contrast to China’s conservative retail expansion, large retailers are apparently maintaining expansion plans and continuing with aggressive marketing campaigns.
While seasonal factors may support demand in value terms, the prospects for gold jewellery volumes will be muted if the price sees further fresh record highs, particularly as elections will likely impact the sector.
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