Rising prices have caused Indian gold demand to drop: World Gold Council
The first three months of the year saw gold demand in India decline by 18% year-on-year to 135.5 tonnes and high gold prices led to muted consumer demand for jewellery in the quarter.
Factors including geopolitical tensions caused gold prices to rise in the first quarter of the 2022 calendar year which put a dampener on many Indian jewellery businesses which were just recovering from the effects of Covid-19. Gold demand in terms of value dropped by 12% to Rs 61,550 crore in the January to March period, according to the World Gold Council’s recent report 'Gold Demand Trends Q1 2022', accessed by the Press Trust of India. The drop in value was less than the drop in weight due to price increases.
“After rising to record levels in the fourth quarter of 2021, India's gold jewellery demand fell by 26% year-on-year in the first quarter of this year to 94 tonnes,” the World Gold Council’s India CEO Somasundaram P R told the Press Trust of India. “Since 2010, barring the pandemic periods, this is only the third time the first quarter total has been below 100 tonnes.”
In line with the trend for gold demand in terms of tonnes and value, gold jewellery demand dropped by 26% year-on-year in terms of weight and 20% in terms of value due to higher prices. The World Gold Council predicts that the 2022 calendar year will witness gold demand of between 800 and 850 tonnes.
The first quarter of the calendar year traditionally includes jewellery buying for the spring wedding season but some families are waiting for gold prices to drop and putting off purchasing bridal jewellery. The calendar during the quarter also included fewer auspicious days, when many people buy gold, compared to in 2021.
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