New Delhi: India’s love affair with gold continues. Despite high prices, gold demand in the country rose by 8% in the last quarter (Q4) of March 2024, reaching 136 tonnes compared to 126 tonnes in the same period last year. This growth is attributed to a combination of factors, including increased investment and a brief price dip in February.
The value of gold demand also saw a significant jump of 20%, reaching ₹75,470 crore (₹63,090 crore). This growth is driven by both stronger jewellery demand (up 4% to 95.5 tonnes) and a surge in investment (up 19% to 41 tonnes).
Sachin Jain, Regional CEO of the World Gold Council (WGC) in India, highlights a growing trend of investment-driven gold demand in India, mirroring a global pattern. This trend coexists with the traditional preference for gold jewellery, even amidst high prices.
Jain credits the rising popularity of gold exchange-traded funds (ETFs) and other gold-backed financial products to efforts by mutual funds and institutions. These instruments are gaining traction as tools for financial diversification.
Interestingly, the Reserve Bank of India (RBI) is also a significant player in the gold market. Jain points out that the RBI bought 19 tonnes of gold in the first quarter of 2024, compared to 16 tonnes in the same period last year.
This quarter also witnessed a shift in consumer behavior. For the first time in recent years, Indian consumers actively bought gold in a rising market, reflecting growing confidence that prices will stay above ₹70,000 per tonne.
The high prices also led to a 10% increase in gold recycling (38.3 tonnes compared to 34.8 tonnes), with some reports suggesting distress selling. Additionally, gold imports rose by 25% to 179.4 tonnes (from 143.4 tonnes).
Looking beyond India, global gold demand also witnessed a 3% increase, reaching 1,238 tonnes. This growth is primarily driven by the over-the-counter market, while gold ETFs saw outflows with a global holding decline of 114 tonnes. Interestingly, China played a major role in this global rise, with renewed investor interest in gold due to a weakening local currency and a slump in domestic equity markets. China’s overall gold demand increased by 13% to 295 tonnes, even though its jewellery demand fell by 6% to 184 tonnes.
The Indian gold market’s resilience in the face of high prices highlights the enduring cultural significance and investment potential of gold for Indian consumers.