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Gold demand slipped 18 per cent in the March quarter to 135 tonnes against 166 tonnes logged in the same period last year, largely due to sharp spike in prices.
Jewellery demand plunged 26 per cent to 94 tonnes against 126 tonnes as consumers expect prices to fall after resolution of the ongoing Russia-Ukraine conflict.
Investment demand
However, investment demand surged five per cent to 41 tonnes (39 tonnes) as investors hedged their portfolio with gold on back of surging inflation.
In value terms, gold demand was down 12 per cent at ₹61,550 crore (₹69,720 crore) while jewellery demand dipped 20 per cent to ₹42,800 crore ( ₹53,200 crore). However, investment demand increased 13 per cent to ₹18,750 crore (₹16,520 crore).
Somasundaram PR, Regional CEO (India), World Gold Council, said after rising to record levels in December quarter, jewellery demand slipped below the 100 tonne-mark for the third time in last 12-years in the March quarter as prices hovered around ₹55,000 per 10 gram-mark.
Most consumers felt the high prices are unrealistic and will fall once war between Russia and Ukraine settles down.
The hiatus in growth could be a result of mixed sentiments in the market about the price, uncertainty over Covid , fear of inflation and long-term impact of the global conflict, he added.
Gold recycling up
With the high prices, gold recycling increased 58 per cent to 28 tonnes, the highest in last two years. The previous high of 41 tonnes was logged in September quarter of 2020.
RBI, the banking regulator, has bought eight tonnes of gold to take up its holding to 760 tonnes in the March quarter. The World Gold Council expects gold demand this year to average around last year’s level of 800 tonnes.
In last two months, the bullion rates in the wholesale markets are at a discount and it touched around $40 an ounce. It is a clear indication that the inventory at the jewellers’ level are very high and consumer demand is sluggish, said Somasundaram.
Equating the sober consumer gold demand to that of strategic time out in IPL, he said a clarity on whether the high prices are sustainable will emerge only after the ongoing war between Russia and Ukraine comes to an end.
Globally, gold demand increased 34 per cent in March quarter to 1,234 tonnes largely due to more than triple inflow of 551 tonnes (182 tonnes) in ETFs.
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