In India, the jewellery demand was down 6% to 562.3 tonne compared to 2022. In the December quarter, the fall was sharper by 9% to 199.6 tonne over the December quarter of 2022.
By Rajesh Bhayani
India’s overall gold demand in calendar year 2023 saw a decline of 3% to 562.3 tonne as high prices of the yellow metal dampened buyer spirit. In the last quarter (Q4), it fell 4% to 266.2 tonne, according to the Gold Demand Trend released by the World Gold Council (WGC) on Wednesday.
The decline was in line with the global gold demand trend that saw an overall fall of 5% to 4,448.4 tonne in 2023, compared to the previous year, mainly due to continuing exchange-traded fund (ETF) outflows.
In India, the jewellery demand was down 6% to 562.3 tonne compared to 2022. In the December quarter, the fall was sharper by 9% to 199.6 tonne over the December quarter of 2022.
“Although consumer interest remained high, it lagged the overall trade sentiment. October’s price correction during Navratri led to a robust consumer response, boosting Diwali sales in November.
However, demand declined in December as gold prices resumed an upward trend, resulting in a 9% drop in Q4 jewellery demand compared to Q4 2022,” said Somasundaram PR, regional CEO, India, WGC. Investment demand, however, was on the rise in 2023. It increased by 7% in the whole year while it increased 18% in Q4.
Compared to India, China saw a sharp rise in the demand as the total demand (both investment and jewellery) went up 16 % to 959.2 tonne. Due to high prices, domestic consumers sold old gold (scrap supply) and the net sale was up 20% to 117.1 tonne — highest after 119.5 tonne in 2019. Globally, old or recycled gold supply went up 9% to 1,237.3 tonne.
At the same time, India’s gold imports increased 20%, with imports in the fourth quarter galloping 43% to 217.7 tonne. Gold ETFs in India are typically seen as liquid avenue and many investors prefer this option.
However, the total holding of gold by India’s ETF industry is only 42 tonne — a record high in 2023. Contrary to this, the total net holding in sovereign gold bonds is 131 tonne. And in 2023, the total buying was 35 tonne against 10.27 tonne in 2022, as per RBI’s data.
Somasundaram is hopeful that there will be a demand recovery in 2024. “Looking forward to 2024, India’s gold demand should benefit from ongoing positive economic conditions. Near-term elections spending impact and acceptance of elevated price levels, suggest the potential for a spurt in demand in the near future. However, any short-term impediments to higher demand could arise from another round of sharp price hikes and volatility triggered by global factors.”
The average international gold price in 2023 of $1,940.54/ounce was the highest-ever annual average price. This was up 8% over 2022. India’s average gold price in 2023, however, went up sharply by 15.8% to a new record of Rs 59,130 per 10 gram against Rs 51,058 (MCX spot price).
Globally, annual net gold buying by central banks fell to 1,037 tonne from 1,081.9 tonne in 2022. Louise Street, senior markets analyst, WGC, said that in 2023, in addition to monetary policy, geopolitical uncertainty was often a key driver of gold demand. “In 2024, we expect this to have a pronounced impact on the market.
Ongoing conflicts, trade tensions and over 60 elections taking place around the world are likely to encourage investors to turn to gold for its proven track-record as a safe-haven asset,” she said, adding that even demand from central banks will stay high in 2024 and may help to offset a slowdown in consumer demand due to elevated gold prices and slowing economic growth.
Source:financialexpress.com