NEW DELHI: Gold remains a favoured hedge, with demand not shrinking despite prices shooting up. The demand for gold in India in 2024 is likely to be similar to last year, Sachin Jain, the chief executive (India), World Gold Council (WGC), said in an interview.
“If there’s too much price volatility, then the demand for gold could be in the lower spectrum of about 700 tonnes. If there is more consistency in prices, we foresee the demand to touch around 800 tonnes,” said Jain, who took over the position at WGC, a body of global gold miners, in March.
In 2023, demand was 745.7 tonnes, down 3% year-on-year, according to WGC. The fall in demand, which was at a four-year low, is attributed to higher prices.
The yellow metal crossed the ₹65,000 mark (for 10 gm) in 2023 from ₹52,000-53,000 in 2022. This year, prices have climbed further. On Friday, 10 gm of gold (24K) cost ₹74,490 in New Delhi, up 19.79% annually.
“The fact that the volume of gold demand during 2024 will be similar to 2023, even with such an increase in gold prices, is a reflection of strength,” Jain, a former managing director of DeBeers India, said.
Good first quarter
Even with such high prices of gold, there is consistent demand for gold bars and coins, said Jain. The first quarter of 2024 (January-March) has seen gold demand at 136.6 tonnes, up from 126.3 tonnes in the same quarter of 2023, according to WGC data.
“The Reserve Bank of India (RBI) also bought over 19 tonnes of gold during the January-March 2024 period after buying about 16 tonnes of gold during 2023,” Jain said. “With the geopolitical situation around the world, there is a sense of de-dollarisation happening across different economies. Look at India and our growing gold reserves.”
In FY24, the RBI added 27.47 tonnes of gold to its reserves, taking it to about 822.1 mt in FY24 from 794.63 mt in FY23. This move is part of a broader strategy to diversify foreign exchange reserves and hedge against inflation and currency volatility.
Gold prices have been highly volatile during the past few quarters due to weak global cues, which has impacted the consumption of plain gold jewellery. While gold prices are up annually, it has fallen in the last month or so due to the reduced likelihood of a US rate cut soon. The price of 24-carat gold has fallen 0.75% in the past week, and 0.61% in the past month.
More demand ahead
Meanwhile, demand for gold purchases is expected to pick up in the second half of the year, as good monsoons are likely to see a spurt in demand for the yellow metal and as consumers adjust to higher prices.
“If you look at the economic situation in India, I think that reflects a healthy consumption of gold,” Jain said. “Investment in gold, like ETFs, etc., is a growing area we are witnessing. I know financial institutions will be coming out with more products around gold and mutual funds.”
As things stand, India is a major importer of gold. According to CEIC and Bank of Baroda Research, total value of gold imported into India stood at $45.5 billion in FY24, up from $35 billion in FY23. Switzerland, the United Arab Emirates, Peru, and Ghana are leading gold suppliers to the South Asian country.
“The way we see it, we need to have a slightly long-term view on gold. Based on our projections, the fundamentals of the sector are strong, and gold has given a strong return from an investment point of view, in the long-term perspective,” Jain said.
**Additional Insights:**
**Impact of Geopolitical and Economic Factors:** The global geopolitical and economic situation plays a significant role in the demand for gold as investors turn to this precious metal as a safe haven during times of uncertainty. Factors such as de-dollarization and inflation fears can drive up the demand for gold, as seen in India’s growing gold reserves and purchases by institutions like the Reserve Bank of India.
**Long-term Investment Outlook:** Gold has historically been viewed as a reliable long-term investment, with the potential to provide strong returns over time. Despite short-term price fluctuations, the fundamentals of the gold sector remain robust, making it an attractive option for investors looking for stability and growth in their portfolios.
NEW DELHI: Gold remains a favoured hedge, with demand not shrinking despite prices shooting up. The demand for gold in India in 2024 is likely to be similar to last year, Sachin Jain, the chief executive (India), World Gold Council (WGC), said in an interview.
“If there’s too much price volatility, then the demand for gold could be in the lower spectrum of about 700 tonnes. If there is more consistency in prices, we foresee the demand to touch around 800 tonnes,” said Jain, who took over the position at WGC, a body of global gold miners, in March.
In 2023, demand was 745.7 tonnes, down 3% year-on-year, according to WGC. The fall in demand, which was at a four-year low, is attributed to higher prices.
The yellow metal crossed the ₹65,000 mark (for 10 gm) in 2023 from ₹52,000-53,000 in 2022. This year, prices have climbed further. On Friday, 10 gm of gold (24K) cost ₹74,490 in New Delhi, up 19.79% annually.
“The fact that the volume of gold demand during 2024 will be similar to 2023, even with such an increase in gold prices, is a reflection of strength,” Jain, a former managing director of DeBeers India, said.
Good first quarter
Even with such high prices of gold, there is consistent demand for gold bars and coins, said Jain. The first quarter of 2024 (January-March) has seen gold demand at 136.6 tonnes, up from 126.3 tonnes in the same quarter of 2023, according to WGC data.
“The Reserve Bank of India (RBI) also bought over 19 tonnes of gold during the January-March 2024 period after buying about 16 tonnes of gold during 2023,” Jain said. “With the geopolitical situation around the world, there is a sense of de-dollarisation happening across different economies. Look at India and our growing gold reserves.”
In FY24, the RBI added 27.47 tonnes of gold to its reserves, taking it to about 822.1 mt in FY24 from 794.63 mt in FY23. This move is part of a broader strategy to diversify foreign exchange reserves and hedge against inflation and currency volatility.
Gold prices have been highly volatile during the past few quarters due to weak global cues, which has impacted the consumption of plain gold jewellery. While gold prices are up annually, it has fallen in the last month or so due to the reduced likelihood of a US rate cut soon. The price of 24-carat gold has fallen 0.75% in the past week, and 0.61% in the past month.
More demand ahead
Meanwhile, demand for gold purchases is expected to pick up in the second half of the year, as good monsoons are likely to see a spurt in demand for the yellow metal and as consumers adjust to higher prices.
“If you look at the economic situation in India, I think that reflects a healthy consumption of gold,” Jain said. “Investment in gold, like ETFs, etc., is a growing area we are witnessing. I know financial institutions will be coming out with more products around gold and mutual funds.”
As things stand, India is a major importer of gold. According to CEIC and Bank of Baroda Research, total value of gold imported into India stood at $45.5 billion in FY24, up from $35 billion in FY23. Switzerland, the United Arab Emirates, Peru, and Ghana are leading gold suppliers to the South Asian country.
“The way we see it, we need to have a slightly long-term view on gold. Based on our projections, the fundamentals of the sector are strong, and gold has given a strong return from an investment point of view, in the long-term perspective,” Jain said.
**Additional Insights:**
**Impact of Geopolitical and Economic Factors:** The global geopolitical and economic situation plays a significant role in the demand for gold as investors turn to this precious metal as a safe haven during times of uncertainty. Factors such as de-dollarization and inflation fears can drive up the demand for gold, as seen in India’s growing gold reserves and purchases by institutions like the Reserve Bank of India.
**Long-term Investment Outlook:** Gold has historically been viewed as a reliable long-term investment, with the potential to provide strong returns over time. Despite short-term price fluctuations, the fundamentals of the gold sector remain robust, making it an attractive option for investors looking for stability and growth in their portfolios.
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