Indian Gold Jewellery Demand Down 12% In First Half Of 2023

According to a latest update from the World Gold Council or WGC, the Indian gold jewellery consumption fell by 8% y/y to 129t in Q2, undermined by record high gold prices. This took H1 demand to 207t, down 12% y/y. 18k gold jewellery continued on an upward trend, as consumers were attracted by the affordability of these products. WGC noted that given the gold price, it would have been reasonable to expect far weaker gold jewellery demand. But arguably the supportive economic backdrop helped, with GDP growth forecast to increase by 6.3% for FY2023/24. A kneejerk reaction to the ban of 2,000 rupee notes during the quarter had a brief but notable impact on gold demand. Unofficial flows of gold surged again in Q2, in response to the high gold price, which served to encourage import duty avoidance. Although demand has held up relatively well so far this year, WGC is cautious regarding H2 prospects as local prices, although off their record highs, remain elevated.

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