Indian gold demand drops as Western banks falter

By

Isabelle Crossley

Published
Mar 17, 2023

Over the past 10 days, gold demand has dropped by 40% as prices have increased significantly. The numerous Western banks facing financial turmoil have had the knock on effect of causing gold prices in India to rise which has dampened demand. 

“Gold prices will continue to see some volatility in the near term as central banks across the globe adjust their monetary policy to steer their respective economies and support growth,” said Kama Jewellery’s managing director Colin Shah, ET Bureau reported. “Internationally, gold may scale levels of $2,020 per ounce and domestically it may touch levels of Rs 60,500 per 10 grams.”
 
Gold demand has especially fallen in South India, which accounts for over 40% of the country’s total annual gold consumption. Consumers are waiting for the gold price to drop before making significant purchases, despite the onset of the spring wedding season. 

Over the past two weeks, gold prices in India have risen by around 7%, spurred on by concerns over the international effects of Swiss bank Credit Suisse falling into crisis. This is because the international situation has created a belief that the Reserve Bank of India will slow its rate increases and this has pushed up gold prices.