India’s gold demand in July-September 2023 jumped by 10% on lower prices

Due to decreasing prices, India's demand for gold grew 10% year-over-year in the quarter ending in September to 210 tonnes, despite the inconsistent monsoon in July and August and the fear of El Nino. A significant portion of this demand came from rural India, which makes up 60% of the country's yearly consumption of gold, estimated by the World Gold Council (WGC) to be between 700-750 tonnes in 2023, slightly less than in the previous year.

The WGC Q3 Gold Demand Trends report shows that central bank buying of the metal is continuing at a historic rate, supporting the asset globally. As a result, quarterly gold demand reached 1,147 tonnes, which is 8% more than its five-year average.

Sales of gold jewellery in India rose 7% annually to 155.7 tonnes, driven primarily by festive demand—which was strongest in southern India—and lower gold prices. After rising to Rs. 60,000 (US$ 720.70) per 10 gm in July, gold prices fell to Rs. 57,000 (US$ 684.67) per 10 gm in August and September, which increased retail demand. 

According to the WGC, the October-December quarter is anticipated to experience a seasonal boost due to festivals and wedding purchases; however, any significant price increase may postpone the release of pent-up demand after a comparatively weak first half of the year. According to traders, buyers have come to terms with the Rs. 60,000 (US$ 720.70) per 10 gm price threshold, therefore a decline in price might also lead to a large increase.

In the September quarter, 19.2 tonnes of gold were recycled in India, a 20% increase from the 16 tonnes recycled the previous year. 220 tonnes of gold were imported into the nation overall during the quarter, up 19% over the same period last year.

The Chief of WGC India, Mr. Somasundaram P.R. stated, "With demand for gold at 481.2 tonnes in the first nine months, we estimate full-year demand to be in the range of 700-750 tonnes, marginally lower than last year's demand of 774 tonnes." He added that demand for investment gold, or bars and coins, increased by 20% to 54.5 tonnes in Q4 of the previous year from 45.4 tonnes.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.