India’s gold demand in the third quarter (Q3) of 2023 climbed 10% to 210.2 tonnes compared to 191.7 tonnes registered in Q3 2022, according to the World Gold Council’s (WGC’s) Q3 Gold Demand Trends report. In value terms, India’s Q3 2023 gold demand grew 28% to ₹188,400 crores.
Total gold jewellery demand in India for Q3 2023 was up 7% at 155.7 tonnes as compared to 146.2 tonnes posted in Q3 2022, which was 19% above its five-year average of 130 tonnes.
However, gold jewellery demand remains weaker on a year-to-date basis, with the Q1-Q3 2023 demand falling 3.3% to 362.7 tonnes, as record local gold prices deterred consumers, the report informed. The value of Q3 jewellery demand was ₹139,550 crores, up by 24% from Q3 2022.
WGC said that during Q3 the correction in the local gold price from record highs, combined with the festive season in south India, were the two major drivers of growth. August and September witnessed a pick-up in activity thanks to festivals such as Onam and Varalakshmi, it noted.
Lower-karat (18K and 14K) jewellery has gained popularity in the face of an elevated gold price and has benefited from retailers promoting these higher-margin products, the report said.
Somasundaram PR, Regional CEO, India, World Gold Council said: “Purchase of gold jewellery in India was up 7% y-o-y aided by softer gold prices and festive demand, more pronounced in South India.”
Total investment demand for Q3 2023 at 54.5 tonnes increased by 20% in comparison to 45.4 tonnes recorded in Q3 2022. In value terms, gold investment demand in Q3 2023 was ₹48,850 crores, up by 40% from Q3 2022.
Commenting on investment demand, Somasundaram added, “Price correction was a major factor that triggered the latent demand which we believe continues to be strong underpinned by strong positive economic sentiment mixed with uncertainties arising from a variety of factors such as fear of inflation, below-normal monsoon and global developments.
“Q4 will get the usual seasonal boost due to festivals and wedding purchases, however any sharp price rise could delay release of pent-up demand following a relatively weak H1. Trade feedback is that consumers have accepted the ₹60,000/- per 10g price point so a downward correction could trigger a significant jump too.
“With first nine months demand at 481.2t, our estimate for full year gold demand is in the range of 700-750t, marginally lower than last year demand of 774t.”
Somasundaram noted, “Gold recycling in India recorded 19.3t, a 20% growth over last year, which is more due to low base of last year and perhaps some profit taking. We believe recycling will continue to grow as initiatives of organised players to increase recycling of jewellery start gathering steam. With HUID in place, policy and tax incentives for recycling of HUID marked pieces can be enabled to grow recycling.”
Total gold imports in India in Q3 2023 went up by 19% to 220 tonnes compared to 184.5 tonnes in Q3 2022.
WGC concluded that India’s gold jewellery demand outlook for the remainder of the year is healthy, although with an element of caution. “The seasonal boost in festive and wedding purchases should help release pent-up demand, particularly after a relatively weak H1. But if the sharply higher prices of early Q4 persist demand may be constrained.”