India’s gold imports rose 5% at 802.8 tonne on a year-on-year basis in 2024 due to high investment demand and big purchases by the Reserve Bank of India, according to the latest data by the World Gold Council.
However, high prices dented jewellery demand by 2% to 563.4 tonne.The total investment demand for 2024 increased by 29% to 239.4 tonne and in the December quarter up 14% to 76 tonne.
Gold investment gained momentum due to “rising gold prices and relatively lacklustre performance of other assets, with domestic stock markets generating mediocre returns in first half of the year and ending the year with a notable downward correction after touching record highs in the September quarter”, the report said.
What is notable is at high prices customers are encashing gold with cash which has increased 16% to 29.6 tonne in the December quarter. The Reserve bank of India (RBI) added a whopping 73 tonne – four-and-a-half times higher than 16 tonne in 2023 – to its foreign exchange reserves. The share of gold in forex reserves rose to its highest ever at 11%.
Gold jewellery demand in 2024 has to be seen from the perspective of record-high gold prices. The international spot gold price is around a record high of $2,866 per ounce. In Mumbai’s wholesale market, standard gold (995 purity) was Rs 83,985 per 10 grams. Pure gold (999 purity) was trading at Rs 84,323 per 10 grams while silver was `95,421 per kg.
India’s fourth quarter jewellery demand was 5% lower at 189.8 tonne as against Q4FY23 due to continued strength in the gold price. Full-year demand was 2% lower at 563 tonne. The report stated that demand in the fourth quarter was concentrated between late October – the peak Diwali festival buying season – and November, when the gold price saw a notable correction coinciding with the onset of the wedding season.
Sachin Jain, regional CEO, India, World Gold Council said, “The increase in India’s gold investment demand, the highest since 2013, is reinforcing gold’s status as a safe-haven asset. This was further enhanced in major metropolitan cities by e-commerce platforms offering rapid delivery of small gold investment bars and coins. Our outlook for 2025 gold demand is between 700-800 tonne. Gold jewellery demand is expected to recover due to wedding-related purchases, provided there is a price stability. The trend of robust gold investment demand is anticipated to continue, with retail investors showing growing interest in gold ETFs, digital gold, and coins and bars
Imports under control
Interestingly in 2024, total net gold import decreased by 4% to 712.1 tonnes. According to sources, even after a steep cut in import duty in last week of July 2024, there wasn’t any material increase in gold imports.
Following the duty cut, demand (and imports) in August increased sharply but, didn’t maintain momentum. Unofficial import of gold was rampant prior to the duty cut. However, after the duty reduction some unofficial imports are estimated to have come through official channels, fuelling some increase in imports.
Central banks keep adding gold
Global Central banks added 1,045 tonnes to global gold reserves in 2024, said the report. Buying ramped up significantly in Q4, reaching 333 tonnes. The National Bank of Poland led the charge with 90 tonnes. The RBI was bought gold every single month till November.
India overtakes China
The demand report stated that “By far the largest contributor to the weakness in volume was China.” On an annual basis, the review of past gold demand reports suggest that for the first time after 2012, India’s gold demand was higher than China’s. Since the last three quarters from the April-June quarter of 2024 onwards, China’s gold jewellery demand has been lagging behind India’s following overall economic weakness there. Although Chinese Investment demand has been higher than India since last two quarters China’s consumer demand (jewellery and investment) has been lower than India. In December 2024 quarter China’s consumer demand was 189.9 tonnes while India consumer demand in the period was 265.8 tonnes.
