The World Gold Council expects India’s gold demand to rise in 2024 despite higher prices. File
| Photo Credit: Reuters
MUMBAI
India’s gold demand is expected to be subdued in the first quarter of 2024 due to lower jewellery sales, but annual demand is anticipated to rise as consumers adjust to higher prices, the World Gold Council (WGC) said on January 31.
Higher purchases in the world’s second-biggest gold consumer could support prices which are trading near record highs. However, the rising demand for imports could widen India’s trade deficit and put pressure on the rupee.
India’s gold demand has been stuck between 700 and 800 metric tons in the past five years, but it is expected to break out of this range and rise to between 800 and 900 tons in 2024, Somasundaram P.R., CEO of WGC’s Indian operations told Reuters. “Given the fact that high prices have now been absorbed and economic growth is robust, demand is resetting its base to 800 to 900 tons,” he said.
Indian gold demand fell 3% in 2023 from the prior year to 747.5 tons, the lowest since 2020, as prices rallying to a record high curtailed jewellery demand, the WGC said in a report published on Jan. 31. Switzerland, the United Arab Emirates, Peru, and Ghana are leading gold suppliers to India.
In the March quarter, demand is expected to stay low due to fewer auspicious wedding days, the WGC said. Weddings are a major driver of gold purchases in India, with the yellow metal in the form of jewellery being a crucial part of a bride’s attire and a popular gift from family and guests.
Indian gold consumption in the October-December quarter fell 4% to 266.2 tons, as a drop in jewellery demand overshadowed higher sales of coins and bars for investment purposes, the WGC said. Meanwhile, gold smuggling into India gained momentum to approximately around 130 tons from around 110 tons a year ago, Mr. Somasundaram said, due to prices reaching record highs.
The Commerce Ministry has backed a long-standing demand from the jewellery industry to reduce import tariffs on gold bars, Government and industry officials said, amid concern the duties were further harming the India’s faltering jewellery exports.
