For the January to March 2023 period, gold jewellery demand in India decreased by 17% to 78 tonnes as compared to Q1 2022 (94.2 tonnes) impacted by the sharp increase in prices, according to World Gold Council’s (WGC’s) latest Gold Demand Trends report.
The country’s gold jewellery demand of 78 tonnes was the weakest for a first quarter in India since 2020, WGC said. Demand was 17% lower compared with Q1 2022. And, coming on the heels of an exceptionally strong Q4, the Q1 figure generated a stark 65% q/q decline, it noted.
Somasundaram PR, Regional CEO, India, World Gold Council said: “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.”
In context of the record high local gold price, it was unsurprising to see such lacklustre jewellery demand. Indian consumers are keenly aware of – and sensitive to – moves in the local gold price, WGC said in the report. We had already reported that demand in Q4 slowed sharply as the price rocketed in December, and this trend continued into January as local prices reached fresh highs. The price pullback in February generated a short-lived recovery, thanks to some bargain-hunting, it noted.
During the quarter, there was a rise in the popularity of 18-karat jewellery, especially among younger consumers who are more price-conscious. The market share of studded jewellery also saw a gradual increase, as the higher margins of these products enabled retailers to offer promotional deals to incentivise purchases. Large retailers in the industry fared well during this period, primarily due to their capacity to execute aggressive marketing campaigns, it informed.
Somasundaram said, “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.”