Inflation, Rupee and policy measures to influence gold consumer sentiments in India: Report

India's gold demand went up by 43 per cent during April-June quarter, but going ahead factors like inflation, Rupee-USD rates and policy measures among others are likely to influence consumer sentiments, says a report.

According to a World Gold Council (WGC) report, India's April-June quarter gold demand stood at 170.7 tonnes, higher from 119.6 tonnes during the corresponding quarter in 2021.

In terms of value, India's gold demand increased by 54 per cent during the second quarter to Rs 79,270 crore, compared to Rs 51,540 crore in the corresponding quarter of 2021, the WGC Gold Demand Trends Q2 2022 report said on Thursday.

"Akshaya Tritiya coupled with traditional wedding buying spurred jewellery demand by 49 per cent to 140.3 tonne, though on a low base, as the second quarter of last year was impacted by a devastating second wave of COVID," WGC Regional CEO, India, Somasundaram PR told PTI.

Going forward, he said, for the full 2022 WGC has kept the demand outlook at 800-850 tonnes, but at the lower end of the range as factors like inflation, gold price, Rupee-USD rates and policy measures among others influence consumer sentiments.

The total demand in 2021 was 797 tonnes, he said.

"The second half of this year jewellery demand in India faces downside risks, due to uncertainty over the economic outlook, a higher import duty and the possibility of additional curbs on gold buying, even if for temporary and tactical reasons with an eye on Indian Rupee and USD exchange rate," he noted.

Upside potential for demand can come from expectations of a normal monsoon, higher inflation and the possibility for range-bound prices, he added.

The gold prices increased from Rs 43,994 per 10 grams on March 31, as against Rs 46,504 per 10 grams on June 30, he said.

Total jewellery demand for April-June 2022 was up by 49 per cent at 140.3 tonne compared to 94 tonne in the same quarter of 2021. The value of jewellery demand jumped 60 per cent to Rs 65,140 crores during the quarter under review, from Rs 40,610 crore a year ago.

While the total investment demand during the second quarter increased by 20 per cent at 30.4 tonnes, in terms of value it was up by 29 per cent at Rs 14,140 crores compared to Rs 10,930 crore in the same period last year.

Total gold recycled in India in Q2 2022 increased 18 per cent to 23.3 tonnes, compared to 19.7 tonnes in the same period last year.

The quarter also witnessed 34 per cent growth in imports at 170 tonnes, compared to 131.6 tonnes in the same period in 2021.

Somasundaram said, even as demand makes a recovery towards near-normal, the Indian bullion market is altering with some fundamental structural reforms such as mandatory hallmarking and exchange trading.

"The proposed launch of the India International Bullion Exchange (IIBX) will kick-start a journey to make India a trusted and efficient trading hub and extend its influence in the global bullion markets," he said.

An efficient price discovery for bullion, responsible and sustainable sourcing, world class trading and vaulting infrastructure at GIFT City and an agile regulatory framework with International Financial Services Centres Authority (IFSCA), IIBX is bound to emerge as a credible global entity in the bullion industry, he said.

"As the importance of bullion rises in an uncertain world, a trusted ecosystem underpinned by IIBX will offer a global advantage to investors in gold. India's efforts to monetise gold will also derive tremendous support from a transparent bullion trading system in GIFT City," Somasundaram added.