India’s gold consumption in 2023 dropped by 3% from the previous year to 747.5 tonnes, according to World Gold Council (WGC) data, as price increase dampened jewellery sales.
Demand for gold jewellery in 2023 dropped by 6% to 562.3 tonnes compared with 2022, WGC data released on Wednesday showed.
The year, however, saw an improvement in gold investment demand, which increased by 7% to 185.2 tonnes, as consumers saw an investment opportunity in the uptrend in prices.
Local gold prices increased by 15% during the year, rising from Rs 55,350 per 10 gm on January 1 to Rs 63,650 per 10 gm on December 31.
Consumers in India have to pay a goods and services tax (GST) of 3% on their gold purchases.
“India’s gold demand in 2023 declined by 3% to 747.5 tonnes, strongly influenced by rising gold prices,” said Somasundaram PR, regional CEO, India, World Gold Council. “Although consumer interest remained high, it lagged trade sentiment. October’s price correction during Navratri stimulated a robust consumer response, boosting Diwali sales in November. However, demand declined in December as gold prices resumed an upward trend, resulting in a 9% drop in Q4 jewellery demand compared with Q4 2022.”
Last year also saw a rebound in investment in gold bars and coins, which grew by 7% year-on-year to 185 tonnes. Demand in the October-December period of 2023 touched 67 tonnes, 64% above the five-year quarterly average.
The correction in gold prices led to a robust investment response in Q3 and Q4, supported by increased interest from physically backed gold ETF investors, setting the total holdings in Indian-listed products at a record 42 tonnes by the end of the year.
Net gold imports in 2023 were 20% higher than the previous year at 780.7 tonnes, primarily due to substantial inventory building by traders.
In the last quarter of 2023, local consumption of gold stood at 266.2 tonnes, down by 4% from a year ago. Total jewellery demand in Q4 of 2023 was down by 9% y-o-y at 199.6 tonnes, according to WGC’s data.
Total investment demand in the December quarter stood at 66.7 tonnes, an increase of 18% from Q4 of 2022. Meanwhile, the total gold recycled in India in Q4 stood at 25.6 tonnes, down by 16% y-o-y, WGC data showed.
