Gold Demand in India in 2023 Drops 3%; Investment Demand Increases 7%
The World Gold Council (WGC) released its Gold Demand Trend report, revealing that India’s gold demand in 2023 experienced a 3% decline to 562.3 tonnes. This drop was attributed to the high prices of gold, which dampened consumer interest in purchasing the precious metal. In the last quarter of 2023, gold demand fell by 4% to 266.2 tonnes. This decline mirrors the global trend, where overall gold demand dropped by 5% to 4,448.4 tonnes, primarily due to continued outflows from exchange-traded funds (ETFs).
Jewelry demand in India was down 6% to 562.3 tonnes compared to the previous year, with a sharper decline of 9% in the December quarter. However, investment demand in India increased by 7% throughout the year and by 18% in the fourth quarter. This contrasts with China, where total gold demand rose by 16% to 959.2 tonnes.
Additionally, India’s gold imports increased by 20%, with a 43% spike in the fourth quarter, reaching 217.7 tonnes. The country’s gold ETF holdings reached a record high of 42 tonnes in 2023, while net holdings in sovereign gold bonds amounted to 131 tonnes. The WGC’s regional CEO for India, Somasundaram PR, expressed hope for a demand recovery in 2024, anticipating that ongoing positive economic conditions and election spending may lead to increased demand.
The average international gold price in 2023 of $1,940.54/ounce was the highest-ever annual average price, marking an 8% increase from the previous year. In India, the average gold price surged by 15.8% to a new record of Rs 59,130 per 10 grams, further reflecting the impact of high prices on consumer demand.
Looking ahead to 2024, the WGC foresees geopolitical uncertainty and ongoing conflicts to have a pronounced impact on the gold market, potentially encouraging investors to turn to gold as a safe-haven asset. The report also predicts high demand from central banks in 2024, which could offset any slowdown in consumer demand due to elevated gold prices and slowing economic growth.
Insight:
In 2023, despite the decline in gold jewelry demand, India witnessed a significant increase in investment demand for gold. This suggests that while consumers may have been deterred by high prices, investors viewed gold as a valuable asset. This shift in demand dynamics reflects a growing recognition of gold as a reliable investment option, especially in the face of global economic and geopolitical uncertainties. As such, the gold market in India is not solely driven by consumer preferences but is also influenced by investment trends and macroeconomic factors.
