According to a new report released on Wednesday by the World Gold Council (WGC), India’s demand for gold increased significantly by 8% during the January–March quarter (Q1) of 2024, hitting 136.6 tons. Despite gold prices hitting all-time highs, this increase was bolstered by a strong economic environment.
Strong gold purchases by the Reserve Bank of India (RBI) contributed to the rise in demand. According to the WGC report, the central bank bought more than 19 tonnes of gold in the first quarter of the current calendar year 2024 (Q1-CY24 / Q4-FY24), which is more than the 16 tonnes it bought in total during the all of 2023.
“Gold jewellery demand in India was 95t, 4% above the comparatively weak Q1’23. India’s continued strong macroeconomic environment was supportive for gold consumption. Rural demand is now seeing similar growth to that of urban India; in recent quarters it lagged behind as it struggled to shake off the effects of the pandemic,” the report stated.
It further continued, “The early improvement in demand was evident in the local gold price, which moved to a premium in late January until late February, before reverting sharply to a sizable discount in March as the surging price choked off demand. The prospect of impending elections likely further contributed to the March slowdown, as gold consumption tends to decline during these periods.”
During the same year, India witnessed a 19% YoY increase in investment in gold bars and coins. The robustness of coin and bar investments was consistent with the general mood in India’s gold market. Positive Q1 inflows (+2t) into ETFs and the introduction of two new funds during the quarter point to the products’ ongoing expansion.
“While investor sentiment towards gold remains positive, the domestic general election, which runs from April to June, may keep demand subdued. Data shows that gold consumption tends to decline ahead of such elections, particularly as there is greater scrutiny on the movement of gold and cash,” the report added.
