India bought 191.7 tonnes of gold worth Rs 85,010 crore in Q3 2022 and also defied the international gold investment trend by posting a positive gold investment figure, the World Gold Council (WGC) has said in its report.
The WGC Q3 gold demand trends report shows that the demand for gold, excluding over the counter (OTC) values is up by 28 per cent to 1,181 tonnes. As a result of this strong demand, the tally of the gold year-to-date (YTD) total has reached its pre-Covid era levels.
Although most of the gold demand was a result of demand from consumers and central banks, the demand for gold as an investment demand remained subdued with a notable contraction in demand. The demand for gold as an investment was down by 47 per cent on a year-on-year (y-o-y) basis.
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Louise Street, senior markets analyst, WGC says: “Looking ahead, we anticipate central bank buying and retail investment to remain strong, and that could help offset potential declines in OTC and exchange-traded funds (ETF) investment that may prevail if the dollar strength persists.”
“ETF investors responded to a challenging combination of markedly higher interest rates and a strong US dollar with significant outflows of 227 tonnes,” the report said.
The report further noted that in India, gold investment demand in Q3 2022 was at Rs 20,150 and was about 10 per cent up as compared to the corresponding period a year ago.
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Here’s are some other India specific gold trends.
India Demanded Gold Worth Rs 85,010 Crore In Q3 2022.
India’s demand for gold for Q3 2022 was up by 14 per cent at 191.7 tonnes. In Q3 2021, the demand was 168 tonnes.
In terms of valuation, the Q3 2022 value of gold was Rs 85,010 crore, and in Q3 2021, it was Rs 71,630 crore.
Says PR Somasundaram, regional CEO, India, WGC: “India’s total gold demand in Q3 2022 at 191.7 tonnes is a 14 per cent increase over last year. This reflects better than expected performance and strong consumer interest, helping year-to-date demand return to pre-covid levels. Credit expansion added impetus to this demand, with bank loan growth touching a nine-year high by quarter-end.”
Demand For Gold Jewellery In India Up By 17 per cent
The total jewellery demand in India for Q3 2022 was 146.2 tonnes, up by 17 per cent as compared to the Q3 2021 figure of 125.1 tonnes, the report said.
In terms of valuation, the demand for gold jewellery was worth Rs 64,860 crore, while in Q3 2021, it was Rs 53,330 crore.
The total gold recycled in India was, however, down by 23 per cent at 16 tonnes in Q3 2022. In Q3 2021, it was 20.7 tonnes.
Highlighting the reasons as to why the demand for gold jewellery in India was high, Somasundaram says that the recovery in gold jewellery demand “was primarily driven by urban India, more specifically southern parts, underpinned by robust economic activities.”
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“However, rural demand was impacted by seasonal effects (monsoons) and inflation,” he adds.
India’s Future Outlook For Gold
According to Somasundaram, consumer sentiment in gold saw a huge uplift after two years of Covid-related concerns.
The demand for gold bars and coins also saw a 6 per cent improvement, as “retail investors responded to gold price drop and weaker equity markets, along with festivities around Ganpati and Puja festivals.”
Somasundaram believes there is optimism in the overall outlook for gold demand in India due to various factors. Also, the Indian retail investment is “likely to continue to benefit from safe-haven demand amid rising interest rates and a weakening rupee.”
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Besides, there is optimism for a rise in demand for gold in India. That said, the record-breaking Q4 2021 numbers will in all probability not to be matched this year, he says.
“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 tonnes similar to last year,” Somasundaram further says.
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