Gold demand in the country surged 8 per cent annually to 136.6 tonne in the March quarter despite prices touching historic highs, according to the World Gold Council.
In its global report 'Gold Demand Trends Q1 2024' released on Tuesday, the World Gold Council (WGC) revealed that the gold demand in India in value terms climbed 20 per cent annually to Rs 75,470 crore during the quarter ending March 2024 on volume growth as well as a rise in quarterly average prices by 11 per cent.
Out of the total demand, the demand for jewellery soared 4 per cent to 95.5 tonne from 91.9 tonne while the demand for investment, including bars and coins, grew 19 per cent to 41.1 tonne from 34.4 tonne. This means that the total gold demand, combining the figures for jewellery and investment, rose to 136.6 tonne in fourth quarter this year from 126.3 tonne in the year-ago period.
Why is gold demand rising despite soaring prices?
Sachin Jain, Regional CEO, India, WGC, said the rising demand reaffirms Indians' enduring relationship with gold. "India's continued strong macroeconomic environment was supportive for gold jewellery consumption even though prices reached a historic high in March leading to a slowdown in sales as the quarter ended," Jain said, adding that India's gold demand could be in the range of 700-800 tonne this year.
"Historically, eastern markets of the world including India and China respond when the prices are going down and there is a fluctuation, whereas western markets respond when the prices are going up. For the first time we have seen a complete reversal where Indian and Chinese markets have responded to an increase in prices of gold," Jain told PTI.
The aggressive gold buying by the Reserve Bank of India (RBI) also contributed to the rise in demand, according to Jain. "The second reason for the increase in demand has been the buying by the central bank RBI," he said.
The RBI bought 19 tonne of gold in the March quarter this year, which is higher than the 16 tonne purchased in the entire calendar year of 2023, according to Jain, who said the central bank would continue buying.
Talking about the outlook for the quarter ending June, he said the demand might slow down due to a steep rise in gold prices and the ongoing Lok Sabha elections.