India’s gold demand in April-June 2023 quarter dropped by 7 per cent to 158.1 tonnes, attributable to high gold prices which significantly impacted affordability and consumer sentiment, said World Gold Council in a report on Tuesday.
In comparison, in the same quarter the previous year, the demand for yellow metal was 170.7 tonnes. Coming to the demand for gold jewellery in India, WGC said the country experienced a notable decline of 8 per cent year-on-year to 128.6 tonnes during the June quarter.
“This decline can be attributed to the prevailing record high rupee gold prices, which significantly impacted affordability and consumer sentiment,” Somasundaram PR, Regional CEO, India, World Gold Council, said in the report.
Subsequently, it said the demand for gold as an investment asset too dropped marginally by 3 per cent to 29.5 tonnes from 30.4 tonnes in April-June 2022.
“There was a brief but notable impact on gold demand following the kneejerk reaction to the ban of 2,000-rupee notes during the quarter. This highlights the sensitivity of Indian consumers to policy changes, which can have short-term effects on gold demand,” WGC said.
On the contrary, gold recycling in India witnessed a sharp spike during the quarter, with an increase of 61 per cent to 37.6 tonnes compared to the previous year.
WGC said many consumers may have opted to book profits from the historically high gold prices.
Going ahead in the remaining part of the year, WGC said it remains cautious about gold demand over uncertainties due to elevated local prices and a slowdown in discretionary spending by consumers.
“However, the success of the monsoon season could bolster sentiment ahead of Diwali season and throw positive surprises. With H1 2023 demand at 271t, our estimate for full-year gold demand is in the range of 650-750t in 2023,” the report said.