India's gold demand declined 18 per cent to 135.5 tonnes in the first three months of this year, mainly due to a sharp rise in prices, according to the World Gold Council (WGC). The demand stood at 165.8 tonnes in the first three months of 2021. In terms of value, gold demand dropped 12 per cent to Rs 61,550 crore in the January-March period. It stood at Rs 69,720 crore in the year-ago period, the 'Gold Demand Trends Q1 2022' report released by the WGC said.
Gold demand appears to be positive in India as the consumer sentiment is likely to recover in 2021, from its dismal performance due to the coronavirus pandemic-related disruptions and volatile price movement, according to a report by the World Gold Council (WGC). Initial data about the Dhanteras festival in November suggest that while jewellery demand was still below average, it had substantially recovered from the lows seen in the second quarter (April-June 2020) of last year, according to the report.
Gold, which lost its sheen to some extent in the second half of 2021, is likely to regain the glitter in the New Year and cross the Rs 55,000-per-10-grams level amid pandemic woes, inflation worries and stronger US dollar. After a stellar run up in 2020 when the yellow metal touched a record high of Rs 56,200 on the MCX in August, the prices are near Rs 48,000 per 10 grams now. This is roughly 14 per cent lower from the all-time highs and 4 per cent lesser compared to January 2021 levels.
Regaining the lost sheen, sales of gold jewellery and coins are set to touch pre-COVID levels in volume terms on the auspicious Dhanteras as easing pandemic concerns and pent up demand saw consumers flocking to stores to buy the precious metal. Increased footfall at stores and brisk sales online as well as relatively softer gold prices compared to record Rs 57,000 per 10 grams level in August spurred increased buying, especially light weight offerings, on Tuesday. Dhanteras is considered to be auspicious for buying precious metals and other valuable items.
In April and May, there were additions by RBI of 600 kg and 900 kg. RBI's total gold holding is now 561.9 tonnes.
This is good news for the central government at a time when crude oil prices are rising.
Indian exporters are said to be exporting gold jewellery with minimum value addition to get a higher gold import quota for domestic market after imports linked to exports under the 80:20 rule.
Forecasts of a further rise in bullion prices keep Indians away from selling gold.
Dhanteras' buying seemed to have been sparked by the belief that prices would remain firm
Many offer personalised ornaments with 3D printed images and engraved names to lure customers in a scenario of high gold prices.
Gold sales were reported at 40 tonnes last year; this might have been surpassed this year.
Mandatory hallmarking of gold would be a positive in making the gold market more organised. Mandatory hallmarking would come into effect from January 15, 2020, with a one-year transition period for trade to sell existing inventories. Experts also expect more policy measures next year to bring in more transparency in terms of gold as an asset class.
In the second half of April, the discount on gold came down to $3 an ounce.
Gold demand in India -- one of most avid purchasers -- is interwoven with culture, tradition, the desire for beauty and the desire for financial protection.
Replaces China as imports more than double to 204 tonnes in September quarter, with demand up 39%.
Gold demand in rural India is expected to be lower this year with weak monsoon affecting household savings, according to the World Gold Council (WGC).
The government has retained 10% duty on import of the yellow metal.
The World Gold Council, which represents the mining industry, puts India's demand between 850 and 950 tonnes in 2014.
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