Demand for gold increased even amid high prices

Mumbai: India's gold demand increased eight per cent year-on-year to 136.60 tonnes in the March quarter of the current year, but keeping in mind the high prices, the country's gold demand is likely to remain weak in the entire year 2024. The country's gold demand in the March quarter of 2023 stood at 126.30 percent.

In terms of value, the country's gold demand increased by twenty percent to Rs 75,470 crore in the March quarter. A report released by the World Gold Council said the gold import bill for the March quarter remained high as a result of an average 11 per cent rise in gold prices in addition to the increase in volumes.

The Reserve Bank of India also saw an increase in gold purchases in the March quarter.

Of the total demand for gold, the demand for jewelery increased by four percent to 95.50 tonnes. Investment demand including coins and wood increased by 19 percent to 41.10 tonnes. Council sources said the continued demand for gold in India despite high prices is an indication of how Indians are attracted to gold.

India's strong macroeconomic environment is supporting growth in gold jewelery consumption. Gold prices reached historic highs in March. The Council has estimated the total demand for gold in the current year to be between 700 to 800 tonnes. If prices continue to improve, demand for gold may remain weak. The country's gold demand in 2023 was 747.50 tonnes.

Amid rising gold prices, for the first time the demand for gold in India and China has been so high. In the entire year of 2023, the Reserve Bank purchased a total of 16 tonnes of gold, while in the first three months of the current year, the RBI purchased 19 tonnes of gold. It has also indicated that the Reserve Bank will continue to buy gold.

In view of elections and high prices, demand for gold may remain soft in the April-June quarter. Gold imports increased 25 percent year-on-year to 179.40 tonnes in the January-March quarter, compared to 143.40 tonnes in the March quarter last year. More than two tonnes of gold has also been invested in Gold ETFs. Good monsoon and wedding demand are expected to support overall gold demand.