India's 2023 gold demand could fall 10% to 3-year low: WGC

Falling demand for gold imports could help to narrow the country's trade deficit and support the rupee

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A saleswoman waits for customers at a jewellery shop in the old quarters of Delhi, India, on May 24, 2023. -- Reuters

By Reuters

Published: Tue 1 Aug 2023, 11:16 AM

India's gold demand in 2023 could fall 10% from a year ago to their lowest in three years, as record high prices are dampening retail purchases, the World Gold Council (WGC) said on Tuesday.

The lower purchases in the world's second-biggest gold consumer could limit a rally in global prices. Falling demand for gold imports could also help to narrow India's trade deficit and support the rupee.

"We remain cautious about gold demand as it faces uncertainties due to elevated local prices and slowdown in discretionary spending," said Somasundaram PR, regional chief executive officer of WGC's Indian operations.

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Demand could fall to 700 metric tons in 2023 from 774.1 metric tons a year ago, he said.

Indian gold consumption in the April-June quarter fell 7% to 158.1 metric tons, as both jewellery and investment demand dropped due to a rally in local prices, which hit a record high of 61,845 rupees per 10 grams in the quarter, the WGC said.

Higher gold prices have been prompting some people to sell their old jewellery and coins, leading to a jump in scrap supplies, he said.

In the June quarter, scrap supplies jumped 61% from a year ago to 37.6 metric tons, the highest in nearly 3 years, the data showed.

Gold smuggling has gained momentum because of record high prices and since New Delhi last year raised import duty on the precious metal, Somasundaram said.

Grey market operators, who smuggle gold in from overseas and sell it for cash to avoid duties, have been offering discounts, thus hurting organised players who pay duties, he added.

Reuters

Published: Tue 1 Aug 2023, 11:16 AM

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