Somasundaram PR, the Managing Director of the World Gold Council today launched the Gold Demand Trends Report. He noted that the First Quarter of 2022 was a price driven story with an overall demand of gold going 34% up with US leading inflows.  There was 12% drop in demand globally, 45% of which belonged to the jewellery category. Net inflow was 270tonnes and outflow 175tonnes, thus the 34% jump evident now. Som mentioned about Egypt being one of the top buyers and China and Russia, unlike always, not a buyer this time around. The Central Bank had continued to purchase and RBI bought 81 tonnes of gold.

In the Indian jewellery sector, sales demand decreased by 26%, investment demand, primarily gold bars and coins, however, grew 5% to 41 tonnes. Overall Indian gold demand fell 18% this quarter and with recycling up by 88% net bullion imports for the quarter was lower by 58% y-o-y.

The outlook for India included rising demand from the rural sector.  Last year, he mentioned the demand was mainly from the urban sector. Further he said that “price will play a significant part in driving the demand.” He then added that if war abates, people would presume the prices of gold too would abate, “Just as in the IPL cricket there is a time-out, the consumer too is waiting and watching the price of gold.” On a positive note, he said, “ We believe these developments will cause trade and consumer sentiments turn firmly positive for gold. Despite a brief wave of Covid at the beginning of the year, India’s economic growth continues to rebound from the pandemic era slowdown. The impact of revival in the rural markets, more particularly with forecast of a normal monsoon for a fifth consecutive year, is likely to be significant for gold in 2022. The ongoing geopolitical situation has reinforced gold’s role as a mandatory asset in every portfolio for its diversification and hedging properties when it matters, and this will strengthen the relevance of gold across the spectrum.”

Louise Street, Senior Analyst EMEA at the World Gold Council said that the first quarter of 2022 was a turbulent one, marked by geopolitical crises, supply chain difficulties and surging inflation. These global events and market conditions had solidified gold’s status as a safe haven holding, not just for investors but also for retail consumers. He further said, “Given the current market dynamics, investment demand is expected to remain strong as the combination of high inflation and heightened geopolitical tensions will likely fuel demand for gold amongst investors. On the other hand, consumers are facing the global cost of living crisis, meaning many will reconsider how they spend their money. While consumer demand has been recovering from covid-inflicted weakness, continued growth in jewellery demand could be stifled by rising costs and a general economic slowdown.”

Access the Gold Demand Trends Q1 2022 report here: 

https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q1-2022