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A fall in the number of weddings and a lack of auspicious days in the March quarter had a direct impact on gold purchasing in the country. This, coupled with rising gold prices globally, prompted many Indian consumers to hold back on their purchases, says the World Gold Council’s latest gold Demand Trends Report, which did not give India specific data.
The softer demand in India, coupled with a similar trend in China, led to a drop in global gold jewellery demand in the March quarter by 7 per cent year-on-year to 474 tonnes. Despite a strong performance in China over the lunar New Year period, this was later dampened by Covid outbreaks in February and March, leading to strict lockdowns as China continues to follow its zero-covid policy.
Solid start
However, the global gold market saw a solid start to 2022, with first quarter demand (excluding over the counter) up 34 per cent year-on-year, thanks to strong ETF (exchange-traded funds) flows, reflecting gold’s status as a safe haven investment during times of geopolitical and economic uncertainty.
Geopolitical crises weighed heavily on the global economy and reinvigorated investor interest, pushing the gold price briefly to $2,070/oz in March, just shy of its all-time high. The report said gold ETFs had their strongest quarterly inflows of 269 tonnes since Q3 2020, more than reversing the 173 tonnes annual net outflow from 2021 and driven in part by the rising gold prices.
Total gold supply increased by 4 per cent year-on-year. This was driven by strong mine production, which hit 856 tonnes. In addition, recycling rose 15 per cent on the previous year, reaching 310 tonnes in response to higher gold prices.
Turbulent Q1
Louise Street, Senior Analyst EMEA at the World Gold Council, commented in the report that the first quarter has been a turbulent one, marked by geopolitical crises, supply chain difficulties and surging inflation. These global events and market conditions have solidified gold’s status as a safe haven holding, not just for investors but also for retail consumers thanks to its unique position as a dual-natured asset class.
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