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India’s overall gold jewellery demand for 2023 declined 6% to 562.3 tonnes: WGC

India’s Q4 (October – December 2023) gold jewellery demand was down 9% year-on-year to 199.6 tonnes, from a relatively elevated Q4 ’22 base of 219.9 tonnes, according to the World Gold Council’s (WGC’s) Gold Demand Trends report. In value terms, India’s Q4 gold jewellery demand was Rs. 187,390 crores, up by 8% from Q4 2022 (Rs. 172,780 crores).

India’s overall gold jewellery demand for the whole year 2023 declined 6% to 562.3 tonnes, which the WGC said, could be seen as robust given the local gold price trend. In the report, WGC said, “The price strength of 2023 encouraged a trend for lighter-weight or lower-carat items, as well as simply reducing the volume of gold jewellery purchased. The higher margins charged on gem-set and 18-karat jewellery further encouraged this shift.”

Somasundaram PR, Regional CEO, India, World Gold Council said: “India’s gold demand in 2023 declined by 3% to 747.5 tonnes strongly influenced by rising gold prices. Although consumer interest remained high, it lagged trade sentiment. October’s price correction during Navratri stimulated 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.

“Bar and coin investment in India rebounded, growing by 7% to 185 tonnes year-on-year. Q4 demand touched 67 tonnes, 64% above the five-year quarterly average. The correction in gold prices led to some robust investment responses in Q3 and Q4, supported by increased interest from physically backed gold ETF investors, setting total holdings in Indian-listed products to a record 42 tonnes by year-end.

“Recycling was 20% higher due to low and supportive higher prices but at 117 tonnes, could be considered the normative expected level. Net gold imports surged by 20% to 780.7 tonnes in 2023, primarily due to substantial inventory building by the trade.

“Looking forward to 2024, India’s gold demand should benefit from ongoing positive economic conditions. The subdued demand range of 700-800 tonnes since 2019 attributable to continuous rise in prices, increase in duties, stock market outperformance, 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.”

WGC said in the report that during Q4 the October price correction, which coincided with Navratri, encouraged a strong consumer response. And Diwali purchases boosted sales in November. But this dried up in December as the price resumed its sharp upward trend, and some reports suggest demand was close to a standstill in the closing weeks of the year.

It noted that Indian gold jewellery demand is likely to be subdued in Q1 if prevailing price levels are sustained: retailers are not optimistic for any meaningful return in demand in the absence of a price correction. Moreover, wedding jewellery demand is likely to be tempered given the fewer number of auspicious wedding days in Q1 (16 versus 28 in Q1 2023). There could be pockets of demand in the run up to the general elections (April-May) during which time government spending generally tends to increase, but the outlook is relatively cautious, it explained.

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