Gold demand down 3% in 2023, singed by high prices

High gold prices due to geopolitical and economic uncertainty caused total gold demand in India to fall 3% to 774.1 tonnes in 2023 by volume, compared to 747.5 tonnes a year ago. While jewellery demand fell 6% to 562.3 tonnes from 600.6 tonnes a year ago, investment demand increased by 7% from 173.6 tonnes in 2022 to 185.2 tonnes in 2023.

Demand for gold in India for Q4 2023 was at 266.2 tonnes valued at ₹187,390 crore, down by 4% as compared to 276.3 tonnes in the same quarter a year ago. Total jewellery demand also decreased by 9% at 199.6 tonnes as compared to Q4 2022 (219.9 tonnes) and the value of jewellery demand was ₹187,390 crores, up by 8% from Q4 2022 (₹172,780 crores), says data released today by the World Gold Council.

Total investment demand at 66.7 tonnes for Q4 2023 increased by 18% in comparison to Q4 2022 (56.4 tonnes). In value terms, gold investment demand was ₹62,610 crores, up by 41% from Q4 2022's ₹44,340 crores. Total gold recycled in India in Q4 2023 was 25.6 tonnes, down by 16% compared to 30.5 tonnes in Q4 2022. Bar and coin investment in India rebounded, growing by 7% to 185 tonnes year-on-year. Q4 demand touched 67 tonnes, 64% above the five-year quarterly average.

"The correction in gold prices led to some robust investment responses in Q3 and Q4, supported by increased interest from physically backed gold ETF investors, setting total holdings in Indian-listed products to a record 42 tonnes by year-end", elaborates Somasundaram PR, Regional CEO, India, World Gold Council.

He says recycling was 20% higher due to low and supportive higher prices but at 117 tonnes, could be considered the normative expected level. Net gold imports surged by 20% to 780.7 tonnes in 2023, primarily due to substantial inventory building by the trade.

The World Gold Council says India's gold demand should benefit from ongoing positive economic conditions. The subdued demand range of 700-800 tonnes since 2019 attributable to the continuous rise in prices, increase in duties, stock market outperformance, near-term elections spending impact and acceptance of elevated price levels, suggest the potential for a spurt in demand shortly, says the council.