India's gold demand drops 5% in June quarter; up 14% in value term: Report

Gold demand India: Gold prices, meanwhile, surged 18 per cent year-on-year (YoY) in the June 2024 quarter to $2,338.2 an ounce (oz), and were up nearly 13 per cent when compared with the December 2023

India Gold Demand, World Gold Council Report: Gold seems to be losing its glitter in India due to a rise in prices. Demand in the April-June 2024 quarter was 149.7 tonnes – a 5 per cent drop compared to 158.1 tonnes in the same period last year, according to a report by the World Gold Council (WGC).

Demand by value in April-June 2024 stood at Rs 93,850 crore, up by 14 per cent compared to Rs 82,530 crore in the same period last year.

“India's gold demand softened slightly in Q2 CY24. This can be attributed to record-high gold prices impacting affordability and causing a slowdown in consumer purchases. However, the overall value of demand remained strong, increasing by 14 per cent, highlighting gold's enduring value for Indian consumers,” said Sachin Jain, regional chief executive officer for India at WGC.

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Gold prices surged 18 per cent year-on-year (Y-o-Y) in the June quarter to $2,338.2 an ounce (oz), reaching a record of $2,427/oz. They were up nearly 13 per cent compared with the December 2023 quarter.

Jewellery demand in India declined 17 per cent to 107 tonnes due to high prices and the impact of the general election and heat waves. This was the weakest second quarter of a calendar year for jewellery since the pandemic-affected Q2 CY21, WGC said.

While the festivals of Akshaya Tritiya and Gudi Padwa provided a temporary boost, high prices continued to dampen consumer sentiment. Investment demand, however, surged by 46 per cent to 43.1 tonnes in April-June, the highest second quarter since 2014 and driven by expectations of further price appreciation and safe-haven buying.

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The 9 per cent reduction in import duty on gold in Budget 2024-25 is expected to revive demand in the July quarter ahead of the main festive season beginning September, said WGC. A healthy monsoon would help demand too.

“India's economic outlook too remains positive, with strong gross domestic product (GDP) forecasts and rural sector recovery are all likely to support demand in the second half of the year. Our forecast for full-year demand is between 700 to 750 tonnes,” WGC said.

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World trend

Global gold demand (excluding OTC) dropped 6 per cent Y-o-Y to 929 tonnes as a sharp dip in jewellery consumption outweighed a minor rise in demand from other sectors.

Jewellery volumes globally dropped 19 per cent Y-o-Y to a four-year low of 391 tonnes in the June quarter. Central banks bought more gold as their net buying was 6 per cent higher Y-o-Y at 184 tonnes, driven by the need for portfolio protection and diversification, WGC said.

Retail bar and coin investment was 5 per cent lower in the June quarter, primarily due to weak demand in Western markets. Gold demand from the technology sector jumped 11 per cent Y-o-Y, with artificial intelligence shaping the trend.