The decline can be attributed to fewer auspicious days coupled with a sharp rise in gold prices that led to lesser weddings and a pause in retail demand, with households postponing gold purchases, awaiting price correction, as per Somasundaram PR, Regional CEO, India, WGC.
“Since 2010, barring the pandemic periods, this is only the third time the Q1 total has been below 100 tonne," he said.
In value terms, gold jewellery demand fell 20% on year ₹42,800 crore in Q1 2022.
Investment demand, in the form of coins and bars, for the January-March period rose 5% at 41.3 tonne. In value terms, gold investment demand in Q1 2022 was at ₹18,750 crore, up 13% from ₹16,520 crore a year ago, the report said. Volatility in equity markets and rising prices supported the increase in investment demand, said Somasundaram.
“With safe-haven demand and rupee depreciation pushing gold prices above Rs.50,000/10g, discussions with trade revealed that most of the buying was lower ticket items such as 10g and below," he said.
Overall Indian gold demand fell 18% in the first quarter. “...with recycling up by 88%, net bullion imports for the quarter was lower by 58% y-o-y. The hiatus in growth could be a result of mixed sentiments in the market about price, uncertainty about covid caused by news in the neighbouring market, fear of inflation and long term impact of the global conflict," said Somasundaram.
The ongoing geopolitical situation has reinforced gold’s role as a mandatory asset in every portfolio for its diversification and hedging properties when it matters, and this will strengthen the relevance of gold across the spectrum, he added.
