India's Gold Demand Dips 16% in Q3, But Value Surges 23% on Investment Shift

The World Gold Council (WGC) reported that India's overall gold demand in the third quarter (July-September) decreased by 16% year-on-year to 209.4 tonnes. Despite this volume decline, the value of gold demand increased by a significant 23%, driven by a substantial rise in gold prices. A notable trend observed was the sharp 31% drop in jewelry demand, with consumers opting for lighter and lower-karat items. Conversely, investment demand, which includes gold coins and bars, surged by 20%. This segment's value climbed by 74% to Rs 88,970 crore, underscoring consumers' strategic commitment to gold as a long-term store of value, with buyers adapting to new price levels. Sachin Jain, regional CEO India at WGC, noted that while sales of old gold for cash decreased, exchanges of old gold for new jewelry remained strong. Gold imports also saw a considerable year-on-year fall of 37% to 194.6 tonnes, while recycling declined by 7% to 21.8 tonnes, suggesting consumers are holding onto their existing gold assets. The upcoming festive and wedding seasons are anticipated to be crucial for gold demand, with WGC expecting full-year demand to be between 600 and 700 tonnes. Globally, gold demand grew by 3% to 1,313 tonnes in the same quarter.

Impact This news impacts Indian consumers by reflecting shifts in spending habits and investment preferences. Gold retailers and related businesses will be influenced by the changing demand patterns. The data provides insights into consumer sentiment regarding inflation and asset preservation, which can indirectly affect broader economic indicators. The shift towards investment demand suggests a more financially astute consumer base. Impact Rating: 4/10

Difficult Terms Explained year-on-year (yoy): A comparison of financial results or data between the same period in consecutive years. investment demand: The purchase of gold in forms such as bars, coins, and exchange-traded funds (ETFs) with the primary intention of capital appreciation or as a store of value. jewellery demand: The purchase of gold in the form of ornaments and decorative items. karat: A measure of the purity of gold, where 24 karat is pure gold and lower karats indicate a percentage of other metals mixed in. Shradh: A period in the Hindu calendar observed to pay homage to ancestors, during which auspicious activities like purchasing valuable items are traditionally avoided. store of value: An asset that can be saved, retrieved, and exchanged at a later time, and which is expected to retain its purchasing power over time. ETFs: Exchange-Traded Funds are investment funds that track an index, sector, commodity, or other asset, but which can be purchased or sold on stock exchanges like a regular stock.