Gold jewellery demand fell to 78 tonnes in 1Q

May 06, 2023

Somasundaram PR, Regional CEO, India, World Gold Council said, “India’s gold demand in Q1 2023 fell 17% y-o-y to 112.5 tonnes following record high and volatile gold prices. This impacted sentiment and gold jewellery demand dropped to 78 tonnes from 94.2 tonnes in Q1 2022 with little support from the investment side. Since 2010, barring the pandemic gap, this is the fourth time that Q1 gold jewellery demand fell below 100 tonnes.

Sharp rise in gold prices and volatility combined with fewer auspicious days to trigger consumption, has led to many households deferring buying perhaps in anticipation of a downward price correction. Investment demand, primarily gold bars and coins, too saw a drop of 17% to 34.4 tonnes in Q1 2023 from 41.3 tonnes y-o-y.

Global factors, primarily US interest rate hikes, pushing up dollar prices coupled with rupee depreciation kept gold prices above Rs.60,000/10g, nearly 19% jump over last year. Discussions with trade indicate that purchases are through recycling old gold jewellery and lower unit purchases, latter reflecting in higher volumes on digital gold platforms that enable micro savings in gold.

Predictably, there was a sharp jump in recycling up by 25% to 34.8 tonnes in comparison to same period last year. Our forecast for the gold demand is muted for 2023 even as the economic momentum in India remains healthy and the RBI rate hike cycle has paused.

The outlook for gold purchases is highly dependent on rupee prices, which show no sign of abating, and which will act as a deterrent, and of course monsoons, though Q4 as always, could throw a surprise. We believe current trends point to less than 800 tonnes of demand for 2023.”

Key takeaways from the India Gold Demand Statistics for Q1 2023 (January – March) are,

1: Demand for gold in India for Q1 2023 was at 112.5 tonnes down by 17% as compared to overall Q1 demand for 2022 (135.5 tonnes).

2: India’s Q1 2023 gold demand value was Rs 56,220 crores, down by 9% as compared to Q1 2022 (Rs 61,540 crores).

3: Total Jewellery demand in India for Q1 2023 decreased by 17% at 78 tonnes as compared to Q1 2022 (94.2 tonnes).

4: The value of jewellery demand was Rs 39,000 crores, down by 9% from Q1 2022 (Rs. 42,800 crores),

5: Total Investment demand for Q1 2023 at 34.4 tonnes decreased by 17% in comparison to Q1 2022 (41.3 tonnes).

6: In value terms, gold Investment demand in Q1 2023 was Rs. 17,200 crores, down by 8% from Q1 2022 (Rs. 18,750 crores).

7: Total gold recycled in India in Q1 2023 was 34.8 tonnes, up by 25% compared to 27.8 tonnes in Q1 2022 &

8: Total net bullion imports in Q1 2023 were 134 tonnes, similar to Q1 2022.

In the row , as a gem & jewellery player in active, Colin Shah, MD-Kama Jewelry expressed on World Gold Council 1Q Report. He said, “Gold prices have rallied for two consecutive years (2021 and 2022). Additionally, the Indian government hiked the import duty on gold in July 2022. This further led to a rise in gold prices.

Gold demand in the domestic market saw a sharp decline in the first quarter of CY23 as record high prices of gold in the Indian market made consumers apprehensive about investing in gold and purchasing jewelry during the quarter. The 18k jewelry category continued to gain popularity due to the higher prices of 24k gold. On a standalone basis, the gold demand was robust but comparatively lower than last year’s record demand.

The government’s policy to hallmark gold jewelry with a 6-digit alpha-numeric code will boost the recycling of old jewelry. The demand for gold is likely to remain stable in the coming quarter. A normal monsoon year will boost rural demand across India. The festive and the marriage season in H2CY23 will witness positive consumer sentiment.

On the institutional front, central banks including the RBI and ETFs will likely pile on gold as signs of a recession in the US get more evident?”

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