Rama Krishna Sangem
Gold seems to be losing its glitter in India to a rise in prices, suggests a recent report by the World Gold Council (WGC), which pegged the gold demand in the India in the April – June 2024 quarter at 149.7 tonnes – a drop of 5 per cent as compared to 158.1 tonnes in the previous corresponding period. But, now the demand may go up as the prices have been slashed in the July 23 union budget.
In value terms, however, gold demand in India by value in the April – June 2004 period stood at Rs 93,850 crore, WGC said, up by 14 per cent as compared to Rs 82,530 crore in the previous corresponding period.
. “India’s gold demand softened slightly in Q2-CY24. This can be attributed to record high gold prices impacting affordability and causing a slowdown in consumer purchases. However, the overall value of demand remained strong, increasing by 14 per cent, highlighting gold’s enduring value for Indian consumers,” said Sachin Jain, regional chief executive officer for India at the World Gold Council.
Gold prices, meanwhile, surged 18 per cent year-on-year (YoY) in the June 2024 quarter to $2,338.2 an ounce (oz), reaching a record of US$2,427/oz during the quarter, and were up nearly 13 per cent when compared with the December 2023 quarter.
High prices reduced demand
Jewellery demand in India, on the other hand too, felt the pressure of high prices, declining 17 per cent to 107 tonnes due to high local prices, the general election and a severe heatwave. This was the weakest second quarter of a calendar year since the COVID-stricken Q2-CY21, WGC said.
While festivals like Akshaya Tritiya and Gudi Padwa provided a temporary boost, WGC believes, record high prices continued to dampen consumer sentiment. Investment demand, however, surged by 46 per cent to 43.1 tonnes, its highest second-quarter level since 2014 driven by expectations of further price appreciation and safe-haven buying.
Going ahead, the recent 9 per cent reduction in import duty on gold in Budget 2024, WGC believes, is expected to revive the gold demand in July quarter ahead of the main festive season that begins from September that could be further boosted by a healthy monsoon.
“India’s economic outlook too remains positive, with strong gross domestic product (GDP) forecasts and rural sector recovery are all likely to support demand in the second half of the year. Our forecast for full year demand is between 700 to 750 tonnes,” WGC said.
Global demand down by 6 pc
At the global level, gold demand (excluding OTC) dropped 6 per cent YoY to 929 tonnes as a sharp dip in jewellery consumption outweighed minor rise in demand from the other sectors.
