India’s gold demand is anticipated to be low in the first quarter of 2024 owing to reduced jewellery sales, but yearly demand is expected to climb as customers adjust to higher costs, according to the World Gold Council (WGC) on Wednesday.
Higher purchases in the world’s second-largest gold consumer may sustain prices, which are nearing record highs.
Rising import demand might expand India’s trade imbalance and put pressure on the currency.
India’s gold demand has been stuck between 700 and 800 metric tonnes for the past five years, but it is likely to break out of this range and reach 800 to 900 tonnes by 2024, according to Somasundaram P.R., CEO of WGC’s Indian operations, Reuters reported.
“Given the fact that high prices have now been absorbed and economic growth is robust, demand is resetting its base to 800 to 900 tons,” he said.
Indian gold consumption declined 3 per cent in 2023 from the previous year to 747.5 tonnes, the lowest since 2020, as prices rose to a record high, reducing jewellery demand, according to a WGC study released on Wednesday.
Switzerland, the United Arab Emirates, Peru, and Ghana are the top gold suppliers to India.
The WGC predicted that demand in the March quarter would remain low owing to fewer auspicious wedding days.
Weddings are a key source of gold purchases in India, with bullion in the form of jewellery serving as an essential aspect of a bride’s dress and a popular present from family and friends.
Indian gold consumption declined 4 per cent to 266.2 tonnes in the October-December quarter, as lower jewellery demand outweighed greater sales of coins and bars for investment purposes, according to the WGC.
Meanwhile, gold smuggling into India increased to around 130 tonnes from 110 tonnes a year before, according to Somasundaram, as prices reached record highs.
India’s commerce ministry has supported the jewellery sector’s long-standing demand for lower import taxes on gold bars, according to government and industry insiders amid concerns that the charges are damaging the country’s failing jewellery exports.
