Notwithstanding volatile prices, gold demand increased by eight per cent in the March quarter to 136 tonnes, against 126 tonnes a year ago, largely led by investments and a sudden fall in prices in February.

In value terms it was up 20 per cent to ₹75,470 crore (₹63,090 crore).

Jewellery demand increased by 4 per cent to 95.5 tonnes (91.9 tonnes) while investment jumped 19 per cent to 41 tonnes (34 tonnes).

Sachin Jain, Regional CEO, India, World Gold Council, said that with growing affluence and wealth generation, India is following the global trend of investment-led gold demand even while keeping live the traditional demand for gold jewellery despite the high prices towards the end of the quarter.

Diversification tool

Thanks to the efforts of mutual funds and other institutions, gold exchange-traded funds and other gold-backed financial products are gaining popularity as a means of financial diversification, he added.

Interestingly, he said, the RBI has bought 19 tonnes of gold in the first quarter of this year, against 16 tonnes in 2023.

The average gold price (excluding import duty and GST) in the March quarter was ₹55,247 (₹49,944) per 10 grams, while in the US it was $2,070 ($1,890) an ounce. Gold closed at ₹72,373 per 10 grams on Monday after a high of ₹73,477 on April 18.

Bullish buying

For the first time in recent years, Jain said, consumers in India have bought more gold in a bullish market, reflecting growing confidence that prices will remain above ₹70,000.

Given the high prices, gold recycling increased 10 per cent to 38.3 tonnes (34.8 tonnes), though there were some reports of distress sale, while imports were up 25 per cent at 179.4 tonnes (143.4 tonnes).

Gold bar and coin demand was up 19 per cent to 41 tonne as the fall in price in February sparked investor interest, with the anticipation of a rebound driving purchases.

Akshaya Tritiya sales

“If the prices remain stable, we expect the demand during Akshaya Tritiya to remain strong, particularly with attractive offers from jewellers,” he said.

While southern India will lead the demand on Akshaya Tritiya, jewellers are registering good sales in Mumbai, Delhi and Kolkata, too, and this is encouraging , said Jain.

Spike in Chinese demand

Globally, gold demand was up 3 per cent to 1,238 tonnes, driven largely by the over-the-counter market. Gold ETFs continued to see outflows with global holdings falling by 114 tonnes, led by North American and European funds, but slightly offset by inflows into Asian-listed products.

China generated the bulk of the increase, with renewed investor interest in gold due to the weakening local currency and bearish domestic equity markets.

Gold demand in China was up 13 per cent at 295 tonnes (261 tonnes) even as its jewellery demand fell six per cent to 184 tonnes.