Somasundaram PR, the regional CEO of WGC’s Indian operations, expressed caution regarding gold demand due to the uncertainties arising from elevated local prices and a slowdown in discretionary spending. He stated that demand could drop to 700 metric tons in 2023, down from 774.1 metric tons in the previous year.
In the April-June quarter, Indian gold consumption experienced a 7% decline to 158.1 metric tons. This decline was attributed to both a decrease in jewelry and investment demand as a result of the surge in local gold prices, which reached a record high of 61,845 rupees per 10 grams during the quarter, as reported by the WGC. The rise in gold prices has triggered an increase in the sale of old jewelry and coins, leading to a surge in scrap supplies.
During the June quarter, scrap supplies witnessed a significant 61% year-on-year increase to 37.6 metric tons, the highest level in nearly 3 years, according to the data. The WGC also highlighted that gold smuggling has intensified due to the record high prices and the imposition of higher import duty by New Delhi last year on the precious metal. This situation has negatively impacted organized players who adhere to duty payments, as gray market operators offer discounts by smuggling gold from overseas for cash transactions.