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India’s Q2 gold jewellery consumption drops 8% to 128.6 tonnes, says WGC



India's Q2 gold jewellery consumption drops 8% to 128.6 tonnes, says WGC

Gold recycling, however, showed an increase in Q2 2023 when compared to the same quarter of the previous year, likely due to consumers capitalising on historic high gold prices

India’s gold demand faced a significant downturn in the second quarter of 2023, as per the latest statistics released by the World Gold Council (WGC) in its Gold Demand Trends report. Despite an increase in value, the total gold consumption for the quarter recorded a decline of 7% compared to the same period in 2022.

During the period from April to June 2023, India’s gold demand stood at 158.1 tonnes, down from 170.7 tonnes in Q2 2022. However, the value of gold demand witnessed a rise of 4%, reaching Rs 82,530 crore, compared to Rs 79,270 crore in the previous year.

The report highlighted that the decline in gold consumption was primarily driven by a notable drop in demand for gold jewellery. Jewellery demand in Q2 2023 recorded 128.6 tonnes, showing an 8% decrease from the 140.3 tonnes reported in Q2 2022. Despite the decrease in volume, the value of jewellery demand rose by 3%, reaching Rs 67,120 crore from Rs 65,140 crore in the previous year.

In the investment sector, gold demand also experienced a slight dip of 3%, with 29.5 tonnes in Q2 2023 compared to 30.4 tonnes in Q2 2022. Nevertheless, the value of gold investment surged by 9% during the same period, reaching Rs 15,410 crore, up from Rs 14,140 crore in the previous year.

One of the contributing factors to the decline in jewellery demand was the record high rupee gold prices, which negatively impacted affordability and consumer sentiment. Additionally, there was a brief but notable impact on gold demand following the kneejerk reaction to the ban of Rs. 2,000 notes during the quarter.

Somasundaram PR, Regional CEO, India, WGC, said, “This highlights the sensitivity of Indian consumers to policy changes, which can have short-term effects on gold demand. While challenges related to high gold prices and inflation persisted, the supportive economic backdrop and consumer adaptability played a significant role in bolstering the market’s resilience.”

On the positive side, gold recycling witnessed a sharp spike, with a 61% increase in Q2 2023 compared to the same period in the previous year. This increase in recycling, totalling 37.6 tonnes, was likely due to many consumers choosing to capitalise on historic high gold prices.

Somasundaram added, “Looking ahead for the rest of the year, we remain cautious about gold demand as it faces uncertainties due to elevated local prices and slowdown in discretionary spending. However, the success of the monsoon season could bolster sentiment ahead of Diwali season and throw positive surprises. With H1 2023 demand at 271 tonnes, our estimate for full-year gold demand is in the range of 650 – 750 tonnes in 2023.”

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