Gold demand drops 20% on high prices

Gold demand in the December quarter was down 20 per cent at 276 tonnes against 344 tonnes logged in the same period last year, largely due to sharp increase in prices.

Jewelery demand dipped 17 per cent to 220 tonnes (265 tonnes), while that of investment slipped 29 per cent to 56 tonnes (79 tonnes), according to the World Gold Council data released on Tuesday.

In terms of value, gold demand dropped 15 per cent to ₹1.25-lakh crore (₹1.49-lakh crore) while that of jewelery plunged 13 per cent to ₹1-lakh crore (₹1.15-lakh crore) and investment was down 25 per cent at ₹25,730 crore (₹34,130 crore).

While gold imports slipped to 165 tonnes (208 tonnes), recycling increased to 30 tonnes (20 tonnes).

Full year demand down 3%

The gold demand last year was down three per cent to 774 tonnes (797 tonnes), while jewelery and investment demand slipped to 600 tonnes (611 tonnes) and 174 tonnes (186 tonnes), respectively.

The value of jewelery demand increased four per cent to ₹2.73-lakh crore (₹2.61-lakh crore) and investment demand was down one per cent at ₹78,860 crore (₹79,720 crore).

With sharp spike in prices, gold recycling increased 30 per cent to 98 tonnes (75 tonnes) and gold imports were down 27 per cent at 673 tonnes (925 tonnes).

Somasundaram PR, Regional CEO, India, World Gold Council, said India gold demand was once again lifted by a good fourth quarter, reflecting the importance of post-harvest incomes and sentiment on the sector.

Despite a relatively subdued trade and consumer weaker sentiment at the beginning of the year, hike in duty and sharp rise in prices in the middle of the season, demand has indeed remained surprisingly resilient.

Notwithstanding lifetime high domestic gold prices, gold jewelery demand was just two per cent lower compared with last year, he said.

RBI gold purchases

The Reserve Bank of India continued its gold purchases adding 33.5 tonnes last year, 57 per cent lower than in 2021 when it had purchased 77.5 tonnes.

“We believe gold demand this year will range between 800 and 850 tonnes subject to a few short-term factors, more particularly monsoon and near-term revival of rural demand,” he added.

Recession pushes up global demand

Demand for gold globally increased 18 per cent to touch 4,741 tonnes (4,013 tonnes) in 2022, the highest since 2011, driven by strong December quarter and hefty central bank-buying.

As fears of a global economic slowdown grew, retail investors and central banks flocked to the haven asset. Despite numerous headwinds such as rising interest rates, a strong US dollar, and geopolitical tensions, gold ended the fiscal year with a modest gain at $1,800 per ounce.

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