According to the WGC, gold demand in India was 191.7 tons (value 85,010 crore) in the third quarter of 2022, compared to 168 tons (₹71,630 crore) in the corresponding period in 2021.
Jewelery demand was 146.2 tons in the reporting period, compared to 125.1 tons last year.
In contrast, the total investment demand for Q3 2022 stands at 45.4 tonnes compared to 42.9 tonnes in Q3 2021.
Recycled gold showed a declining trend in Q3 2022 at 16 tons compared to 20.7 tons in Q3 2021.
For the nine months of 2022, gold demand was 497.8 tons (jewelry 380.7 tons, investment 117.1 tons) versus 453.5 tons (jewelry 345.9 tons investment 107.6 tons
“India’s total demand for gold in the third quarter of 2022 at 191.7 tons is up 14 percent from last year. This reflects better-than-expected performance and strong consumer interest, pushing demand for the year to is now returning to pre-Covid levels,” said Somasundaram. PR, Regional CEO, India, WGC.
Credit expansion boosted this demand, with bank loan growth reaching a nine-year high by the end of the quarter.
He said the recovery in gold jewelery demand was mainly driven by urban India, more specifically southern parts, supported by robust economic activity with a 17 percent year-on-year increase in tonnage.
However, rural demand was influenced by seasonal effects (monsoons) and inflation.
On the other hand, demand for Indian bars and coins also saw a six percent improvement yoy to 45.4 tons, he added.
Looking ahead, Indian retail investment is likely to continue to benefit from safe haven demand amid rising interest rates and a weakening rupee. The general outlook for the remainder of the year is optimistic with weddings and Diwali demand in the fourth quarter, but it is is unlikely to match last year’s record-breaking fourth quarter, our estimate of gold demand for the full year is about 750-800 tons, comparable to last year,” Somasundaram said.
At the global level, WGC said demand for the yellow metal (excluding OTC) reached 1,181 tons in the third quarter of 2022, up 28 percent year-on-year.
Strong demand pushed the year-to-date total to pre-Covid levels. Demand for gold was supported by consumers and central banks, although there was a notable contraction in investment demand.
Investments fell 47 percent year-over-year, according to WGC, as exchange traded fund (ETF) investors responded to a challenging combination of significantly higher interest rates and a strong US dollar with significant outflows of 227 tons.
These moves, in addition to weakness in OTC demand and negative sentiment in futures markets, hampered gold’s price performance, contributing to an eight percent quarter-on-quarter decline in the price in the third quarter of 2022.
Just as demand for consumer gold grew, central bank purchases soared with estimated record purchases of nearly 400 tons in the third quarter, WGC said.
“Looking ahead, we expect central bank buying and retail investment to remain strong, which could help offset potential declines in OTC and ETF investment that could prevail if dollar strength continues. We also expect jewelry demand to will continue to perform strongly in some regions such as India and South East Asia, while the technology sector is likely to decline further in light of the economic slowdown,” said Louise Street, Senior Markets Analyst.
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