29 Apr , 2022 By : monika singh
India’s gold demand dropped 18% in the March quarter from a year before to 135.5 tonnes, as a spurt in prices and fewer auspicious days to buy the precious metal curtailed consumption, according to the World Gold Council (WGC).
In contrast, the global gold demand jumped 34% during this period to 1,234 tonnes, the highest since the December quarter of 2018, as investors flocked to safe-haven investments in the wake of geopolitical and economic uncertainties.
In value terms, domestic gold demand dropped at a slower pace of 12% from a year earlier to Rs 61,550 crore in the January-March period, showed the WGC data released on Thursday.
Indian gold prices started inching up in January in response to geopolitical tension, rising by 8% to Rs 45,434 per 10 grams (excluding taxes) in the March quarter. The prices stood at Rs 42,045 crore in the three months through March last year.
A sharp 26?ll in jewellery demand to 94.2 tonnes more than offset a 5% rise in investment demand, which stood at 41 tonnes.
Somasundaram PR, WGC regional chief executive officer (India) said: “Since 2010, barring the pandemic periods, this is only the third time the March quarter total has been below 100 tonnes (for jewellery). Fewer auspicious days coupled with a sharp rise in gold prices meant fewer weddings and a pause in retail demand, with households postponing gold buying in anticipation of a price correction.”
Recycling surged by 88% in the March quarter and net bullion imports for the quarter dropped 58%.
Somasundaram said the hiatus in demand growth could be a result of mixed sentiments in the market about price, uncertainty about Covid caused by news in the neighbouring market (China), fear of inflation and the long-term impact of the global conflict.
“We believe these developments will cause trade and consumer sentiments to turn firmly positive for gold,” he said. Despite the Omicron onslaught at the beginning of 2022, India’s economic growth continues to rebound from the pandemic era slowdown. The impact of revival in the rural markets, more particularly with a forecast of a normal monsoon for a fifth consecutive year, will likely be significant for gold this year.
“The ongoing geopolitical situation has reinforced gold’s role as a mandatory asset in every portfolio for its diversification and hedging properties when it matters, and this will strengthen the relevance of gold across the spectrum,” he said.
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