Gold demand surges in India for Q3, 2022: World Gold Council

The jewellery demand for the period under review was at 146.2 ton up from 125.1 ton the previous year

November 1, 2022

India’s gold demand skyrockets by 14%

On Tuesday the World Gold Council (WGC) said that the demand for gold went up by 14 percent to 191.7 ton in India during the third quarter of this calendar year.

According to the WGC, the gold demand in India was at 191.7 ton (value Rs.85,010 crore) during Q3 2022 as against 168 ton (Rs.71,630 crore) in the corresponding period in 2021. The jewelry demand for the period under review was 146.2 ton up from 125.1 ton the previous year.

On the other hand, the total investment demand for Q3 2022 at 45.4 ton in comparison to 42.9 ton in Q3 2021. The recycled gold showed a downward trend in Q3 2022 with 16 ton as compared to 20.7 ton in Q3 2021.

For the nine months of 2022, the gold demand stood at 497.8 ton (jewelry 380.7-ton, investment 117.1 ton) as compared to 453.5 ton (jewelry 345.9-ton investment 107.6 ton

“India’s total gold demand in Q3 2022 at 191.7 tons is a 14 percent increase over last year. This reflects better-than-expected performance and strong consumer interest, helping year-to-date demand return to pre-Covid levels,” said Somasundaram P R, Regional CEO, India, WGC.

Credit expansion added impetus to this demand, with bank loan growth touching a nine-year high by quarter-end.

He said the recovery in gold jewellery demand was primarily driven by urban India, more specifically Southern parts, underpinned by robust economic activities with a 17 percent y-o-y increase in tonnage terms.

Rural demand, however, was impacted by seasonal effects (monsoons) and inflation. On the other hand, Indian bar and coin demand also saw a six percent y-o-y improvement to 45.4 ton, he added.

“Looking ahead, Indian retail investment is likely to continue to benefit from safe-haven demand amid rising interest rates and a weakening rupee. There’s optimism in the overall outlook for the rest of the year with weddings and Diwali demand in Q4, but it is unlikely to match last year’s record-breaking Q4. Our gold demand estimate for the full year is around 750-800 ton similar to last year,” Somasundaram said.

At the global level, WGC said the demand for the yellow metal (excluding OTC) in the third quarter of 2022 hit 1,181 ton, up 28 percent year-on-year.

Strong demand pushed the year-to-date total to its pre-Covid levels. Gold demand was bolstered by the consumers and central banks, although there was a notable contraction in investment demand.

According to WGC, investment was down 47 percent year-on-year, as exchange-traded fund (ETF) investors responded to a challenging combination of markedly higher interest rates and a strong US dollar with significant outflows of 227 ton.

These movements, alongside weakness in OTC demand and negative sentiment in futures markets, hampered gold’s price performance — contributing to an eight percent quarter-on-quarter drop in the price during Q3 2022.

Just as consumer gold demand firmed, central bank buying picked up significantly with estimated record purchases of nearly 400 t in the third quarter, said WGC.

“Looking ahead, we anticipate central bank buying and retail investment to remain strong and that could help offset potential declines in OTC and ETF investment that may prevail if the dollar strength persists. We also expect to see jewellery demand continue to perform strongly in some regions such as India and Southeast Asia, while the technology sector will likely witness the further decline in the face of the economic deceleration,” Louise Street, Senior Markets Analyst said.

[With Inputs from IANS]

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