Gold Jewellery Demand Soars In India In Q2 Despite A Dip Globally: WGC Report

The demand for gold in India was up 43 per cent at 170.7 tonnes in the second quarter of 2022 due to a low base year in 2021, but the global gold demand dipped 8 per cent to 948 tonnes in the same period, the World Gold Council (WGC) Q2 2022 report said on Thursday. 

India’s Q2 gold demand value was Rs 79,270 crore as compared to Rs 51,540 crore in Q2 of 2021, the WGC noted.

Somasundaram PR, regional CEO, India, WGC, said in a press conference that “as we move forward in H2 2022, Indian gold jewellery demand faces some downside risks due to uncertainty over the economic outlook, a higher import duty, and the possibility of additional curbs on gold buying, even if for temporary and tactical reasons with an eye on INR-USD exchange rate”.

He further added that the “upside potential for demand (gold) can come from expectations of a normal monsoon, higher inflation, and the possibility for range bound prices.”

WGC also noted that after gold prices increased sharply in April 2022 due to geopolitical tensions, including the Russia-Ukraine war, the prices cooled off in Q2 2022. This trend was observed due to the investors shifting their “focus to rapidly rising interest rates and a strikingly strong US dollar”.

India Gold Trends Q2 2022

Here are the various gold trends that WGC observed in India for Q2 2022:

Jewellery Demand Up: WGC noted that the total Indian consumer jewellery demand in Q2 2022 was up by 49 per cent at 140.3 tonnes as compared to 94 tonnes in the same period of 2021. The value of jewellery demand was up by 60 per cent at Rs 65,140 crores compared to Rs 40,610 crore in 2021.

Somasundaram added that “Akshaya Tritiya, coupled with traditional wedding buying, spurred jewellery demand by 49% to 140.3 tonnes, though on a low base as Q2 of last year was impacted by a devastating second wave of covid. Total jewellery demand for H1 reached 234 tonnes, which was 6% higher y-o-y.”

Gold Investment Up: It was recorded that total Indian investment in gold for Q2 2022 was up by 20 per cent at 30.4 tonnes when compared to Q2 2021’s figure of 25.4 tonnes. In pure valuation terms, demand rose by 29 per cent to Rs 14,140 crore. In 2021, this figure was Rs 10,930 crore.

Gold Supply Robust: WGC in their report observed that total gold recycled in India in Q2 2022 was 23.3 tonnes when compared with 2021’s figure of 19.7 tonnes; gold recycling increased by 18 per cent.

Somasundaram noted that the Indian government was closely watching the gold demand situation in India and the impact it leaves on the economy. Hence, they raised the import duty on yellow metal. 

As per data from the WGC report, gold import in India for Q2 2022 was 170 tonnes as compared with 131.6 tonnes in Q2 2021. This suggests an increase of 34 per cent for gold imported to India.

Future Outlook

Somasundaram said in the press conference that the setting up of the India International Gold Exchange (IIBX) at Gujarat International Finance Technology (GIFT) city in Gandhinagar IFSC is a step in the right direction. 

He added that the launch of IIBX will start India’s journey as a trusted and efficient trading hub and may also extend its influence in the global bullion market and it being the world’s second-largest gold consumer also helps.

He also said that the way the Reserve Bank of India and the government handled the regulations and the speed of setting up a framework for operations is something, which is beyond expectations. The speed, efficiency, activeness, and agility of the regulators and the government are praiseworthy, he added.

“An efficient price discovery for bullion, responsible and sustainable sourcing, world class trading and vaulting infrastructure at GIFT City, and an agile regulatory framework with IFSCA, IIBX is bound to emerge as a credible global entity in the bullion industry,” he added.