Record high gold prices and volatility saw India’s demand for gold in January-March quarter contract 17% year-on-year to 112.3 tonne and for the whole of 2023, market will struggle to reach the levels of 774 tonne seen last year, India CEO of World Gold Council Somasundaram PR said on Friday.
Record high gold prices and volatility saw India’s demand for gold in January-March quarter contract 17% year-on-year to 112.3 tonne and for the whole of 2023, market will struggle to reach the levels of 774 tonne seen last year, India CEO of World Gold Council Somasundaram PR said on Friday.
“First quarter in India is not good for gold. Going forward, a lot will depend on monsoon and price behaviour (of gold),” he said at an interaction with the media. In value terms, demand declined 9% year-on-year in the first quarter to Rs 56,220 crore.
The quantum of drop in demand in both volume and value terms was the same for jewellery and investment purposes.
High prices have spurred the recycling of gold which increased 25% year-on-year in January-March to 34.8 tonne. As prices stay up, the gold recycling could be closer to 100 tonne in 2023 which will lower imports, Somasundram said.
He did not give guidance on the quantum of imports or prices.
As taxes on gold in India add up to 18.5%, the propensity to smuggle is very high in months of high demand. As the October-December quarter is the period of high demand, smuggling picks up in those months, he said. On Thursday, the price a retail buyer paid for 10 grams of gold is Rs 64,500, including taxes.
Somasundram said there is still some push back from a part of the industry on compulsory hallmarking.
The government is planning to make hallmarking of bullion compulsory after it made it mandatory for gold jewellery from June 16, 2021.
Recently, rules for jewellery hallmarking have been made even stricter. Bureau of India Standards (BIS) has prohibited the sale of hallmarked gold jewelry or gold artefacts without 6-digit alphanumeric Hallmark Unique Identification Number (HUID) after March 31, 2023.
“Not all parts of the trade are enthused about it,” Somasundaram said.
Globally too, gold demand in January-March contracted 13% year-on-year despite massive buying by central banks and return of demand from China.
Total world demand for gold in January-March was 1,080 tonne, of which central banks across the world accounted for 228 tonne. Last year, in the same period, they had bought 82 tonne, out of 1,200 tonne demand.
In 2022, central banks mopped up 1,000 tonne out of the total world demand of 4,700 tonnes. In 2021, they bought 456 tonne, of the 4,000 tonne gold sold.
Source:indianexpress.com