India has witnessed a notable decrease in gold jewellery demand in the second quarter of 2024, according to the World Gold Council (WGC). India’s Q2 gold jewellery demand fell by 17% to 106.5 tonnes, down from 128.6 tonnes in Q2 2023. This decline is attributed to record-high gold prices, which have impacted affordability and slowed consumer purchases.
Despite the drop in volume, the value of jewellery demand remained relatively stable at Rs. 66,810 crores, a slight decrease from Rs. 67,120 crores in the same period last year. The high gold prices, exacerbated by local market factors, have posed challenges for consumers, especially during the key festive seasons of Akshaya Tritiya and Gudi Padwa, which typically boost sales.
Sachin Jain, Regional CEO of the World Gold Council in India, commented on the trends, stating, “India’s gold demand softened slightly in Q2 2024, reaching 149.7 tonnes, down 5% year-on-year. This can be attributed to record high gold prices impacting affordability and causing a slowdown in consumer purchases. However, the overall value of demand remained strong, increasing by 14%, highlighting gold’s enduring value for Indian consumers.”
Investment demand for gold, however, showed a contrasting trend, surging by 46% to 43.1 tonnes, its highest second-quarter level since 2014. This surge is driven by expectations of further price appreciation and a preference for gold as a safe-haven asset. The value of investment demand also rose sharply, increasing by 75% to Rs. 27,050 crores compared to Rs. 15,410 crores in Q2 2023.
Interestingly, India saw a 39% decline in gold recycling, with 23 tonnes of gold recycled in Q2 2024, down from 37.6 tonnes in the same period last year. This trend suggests that consumers are opting to exchange old jewellery for new rather than cashing in, highlighting the metal’s role as a store of value.
Jain added, “Looking ahead, the recent 9% reduction in import duty on gold is expected to revive the gold demand in July quarter ahead of the main festive season that begins from September, that could be further boosted by healthy monsoon. India’s economic outlook too remains positive, with strong GDP forecasts and rural sector recovery are all likely to support demand in the second half of the year. Our forecast for full year demand is between 700 to 750 tonnes.”