India’s gold demand plunged to a six-year low (excluding Covid in 2020) and was down 17 per cent in the March quarter to 112 tonnes against 135 tonnes logged in the same period a year ago on the back of record high prices.
In value terms, it dipped nine per cent to ₹56,220 crore (₹61,540 crore).
Jewellery demand also dropped to a six-year low as it decreased 17 per cent to 78 tonnes (94 tonnes) and in value terms, it slipped ₹390 crore (₹428 crore). Investment demand was also low at 34 tonnes (41 tonnes).
Recycled gold was up 25 per cent at 35 tonnes (30 tonnes) as consumers took advantage of high prices to recycle their old gold. Bullion imports were flat at last year’s level of 134 tonnes. However, imports of dore (impure gold) fell 41 per cent to 30 tonnes (52 tonnes).
Gold retail prices increased 26 per cent to ₹63,000 per 10 gram against an average price of ₹49,977 in the March quarter.
RBI adds glitter to its reserve
Meanwhile, RBI continued to add gold to its reserve for the fifth consecutive year and bought seven tonnes to 796 tonnes along with other central banks of Singapore, China, Turkey and Russia.
Central banks have been building their reserves due to the fear of stagflation in the US and the simmering Russia-Ukraine crisis.
Somasundaram PR, Regional CEO (India), World Gold Council, said gold jewellery demand fell below 100-tonne-mark for the fourth time since 2010, barring the pandemic gap as prices of the precious metal rose sharply amid intense volatility.
Global factors, primarily US interest rate hikes, pushing up dollar prices coupled with rupee depreciation kept gold prices above ₹60,000 per 10 grams, nearly 19 per cent higher over last year, he added.
The Council expects gold recycling to cross 100 tonnes given the high prices. Gold demand is expected to revive in the December quarter as current economic uncertainty settles down, said Somasundaram.
However, overall gold demand in this year is expected to muted closed to last year level of 774 tonnes depending on rupee-dollar value, he said.
On implementation of Hallmark Unique Identification number, he said it will become a reality sooner than later though the industry may delay roll-out as no consumer wants to buy a non-hallmarked jewellery given the gold prices hovering above ₹63,000 per 10 gram level.