India's gold jewellery demand falls 17% on year in June quarter

According to a latest update from the World Gold Council or WGC, record gold prices weighed heavily on Indian gold jewellery demand in Q2 as it fell 17% y/y to 107 tonnes (t) the weakest second quarter since the COVID-stricken Q2 2021. H1 demand of 202t is the lowest since 2020. Despite the sharp decline in demand, the domestic economic environment remains healthy: GDP growth is forecast at 7% and increased sales of two-wheelers and FMCG seem to point towards recovery in the important rural sector. Although gold prices retreated in June from their May peak, they held above the psychologically significant threshold of Rs 70,000 per 10 grams and this kept demand subdued as reflected in the persistent discount in the local price during the quarter. Along with the record gold price, several other factors contributed to the relatively weak Q2. The national elections from mid-April to early June proved disruptive to gold jewellery consumption, as did the severe heatwave that saw record temperatures in Delhi at the end of May.

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