Gold demand could remain under pressure during the fourth quarter of 2023 (October-December) with prices of the yellow metal inching up. Indian gold demand was 276.3 tonnes during the fourth quarter of 2022.
“We have seen the prices inching up because of global developments. How the prices will react we will have to see. There will be an uptick in demand, but will it be as significant as last year is still difficult to say.
“Last year during the fourth quarter we had a demand of 276 tonnes. We may not see that much. Even if we are going to see the same level as last year, overall demand for the full year will be lower than last year,” said Somasundaram PR, regional CEO, World Gold Council, while releasing the third quarter gold demand numbers.
He added that while festival and wedding purchases are expected to give the usual seasonal boost during Q4 2023, any sharp price rise could delay the release of pent up demand following a relatively weak first half.
The council has estimated the full year demand at a range of 700-750 tonnes, lower than 774 tonnes in 2022. With the first nine months demand at 481.2 tonnes, this means demand during the fourth quarter could be in the range of 218.8-268.8 tonnes, lower than that of Q4 2022.
India’s gold demand was 210.2 tonnes during the quarter (Q3 2023), up 10 per cent from 191.7 tonnes in Q3 2022. While jewelley demand during the quarter was up 7 per cent over the year ago period (from 146.2 tonnes to 155.7 tonnes) aided by festive demand, investment demand in bars and coins was up 20 per cent year -on-year (from 45.4 tonnes to 54.5 tonnes).
“Price correction was a major factor that triggered the latent demand which we believe continues to be strong, underpinned by positive economic sentiment mixed with uncertainties from a variety of factors such as fear of inflation, below-normal monsoon and global developments,” said Somasundaram PR.
Gold prices during Q3 2023 was at $1,928.5 per ounce lower than $1,975.9 per ounce during Q2 2023. However, it has since increased to $1,999.30 as of 5:30 AM GMT on October 31, 2023.
Commodity analysts are keeping a close watch on the development in Gaza. “Israel’s ground offensive into Gaza will likely have limited long term impact on gold prices, unless the conflict were to spread into countries such as Iran, affecting oil prices,” said Ravindra Rao, VP–head of commodity research, Kotak Securities Ltd.