Gold demand in India increased by 43% to 170.7 tonnes in the second quarter of 2022 due to a weak base year in 2021, but global gold demand fell by 8% to 948 tonnes in over the same period, according to the World Gold Council. (WGC) The second quarter 2022 report was announced on Thursday.
India’s gold demand value in the second quarter was Rs 79,270 crore compared to Rs 51,540 crore in the second quarter of 2021, the WGC noted.
Somasundaram PR, Regional CEO, India, WGC, told a press conference that “As we move forward into the second half of 2022, Indian gold jewelery demand is facing downside risks due to the uncertainty surrounding the economic outlook, a higher import duty and the possibility of further curbs on buying gold, even if for temporary and tactical reasons with an eye on the rate of INR-USD exchange rate”.
He further added that “potential for upside demand (for gold) may come from expectations of a normal monsoon, higher inflation and the possibility of range bound prices.”
WGC also noted that after gold prices rose sharply in April 2022 due to geopolitical tensions, including the Russian-Ukrainian war, prices cooled in the second quarter of 2022. This trend was observed in because investors were “focused on rapidly rising interest rates and a surprisingly strong US dollar”.
Gold Trends in India in Q2 2022
Here are the various gold trends that WGC observed in India for the second quarter of 2022:
Increase in jewelry demand: WGC noted that total Indian consumer jewelery demand in the second quarter of 2022 increased by 49% to 140.3 tonnes from 94 tonnes in the same period of 2021. The value of jewelery demand increased by 60%. at Rs 65,140 crores from Rs 40,610 crores in 2021.
Somasundaram added that “Akshaya Tritiya, coupled with traditional bridal shopping, boosted jewelry demand by 49% to 140.3 tons, albeit on a low base as the second quarter of last year was hit by a devastating second wave of covid. Total jewelry demand for the first half reached 234 tons, up 6% year-on-year.
Investment in gold on the rise: It was recorded that India’s total gold investment for the second quarter of 2022 increased by 20% to 30.4 tonnes from the figure of 25.4 tonnes in the second quarter of 2021. In pure valuation terms, demand increased by 29% to Rs 14,140 crore. In 2021, this figure was Rs 10,930 crore.
Robust Gold Supply: WGC in its report observed that the total gold recycled in India in the second quarter of 2022 was 23.3 tonnes compared to the 2021 figure of 19.7 tonnes; gold recycling increased by 18%.
Somasundaram noted that the Indian government is closely monitoring the gold demand situation in India and the impact it leaves on the economy. Therefore, they increased the import duty on the yellow metal.
According to data from the WGC report, India’s gold imports in the second quarter of 2022 were 170 tonnes compared to 131.6 tonnes in the second quarter of 2021. This suggests a 34% increase for gold imported into India.
Somasundaram said at the press conference that the establishment of the India International Gold Exchange (IIBX) in the city of Gujarat International Finance Technology (GIFT) at Gandhinagar IFSC is a step in the right direction.
He added that the launch of IIBX will mark the beginning of India’s journey as a reliable and efficient trading hub and could also expand its influence in the global bullion market. Being the second largest consumer of gold in the world also helps.
He also said that the way the Reserve Bank of India and the government have handled the regulations and the speed of setting up a framework for operations is something beyond expectation. The speed, efficiency, activity and agility of regulators and government are commendable, he added.
“Efficient bullion price discovery, responsible and sustainable sourcing, world-class trading and storage infrastructure at GIFT City, and an agile regulatory framework with IFSCA, IIBX is set to emerge as a credible global entity in the world. bullion industry,” he added.