Festive Season 2023: Gold demand may dampen as prices rally, says World Gold Council

Gold demand: World Gold Council (WGC) has said that the gold demand during the peak festive season in India this year may dampen, as the prices rally. A drop in sales in India, could limit a rally in global prices. This is because India is the world's second largest gold consumer.

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As per Somasundaram PR, regional chief executive officer of WGC's Indian operations has mentioned that higher prices in December could cut back the purchases. Usually, the highest sales of the year is seen in December.

Also Read: Festive Season Sale 2023: Spending on cars, smartphones, TVs and other luxury items rise

The demand for gold becomes strong towards the end of the year, as people believe buying gold during Dussehra and Diwali is auspicious. As per Business Standard, the gold prices jumped this week to 61,396 rupees per 10 grams, near the all-time high of 61,845 rupees hit earlier this year. Last year, prices in the December quarter were nearly 20% lower than this year.

As per Somasundaram, the demand is expected to be lower than last year's 276.3 metric tons in the december quarter.

"Currently, price is a significant influencer. If there is a substantial drop in price closer to Diwali, the entire situation could change," he said.

As both the jewellery and investment demand improved as the prices fell in the July-September quarter fell, the gold consumption rose 10% to 210.2 metric tons. He further mentioned that in 2023, the demand could fall to around 700 metric tons which is the lowest in three years. Last year, the demand was at 774.1 metric tons.

Meanwhile, a WGC data has also mentioned that the rise in prices, is prompting some people to sell their old jewellery and coins. This has lead to a jump in scrap supplies by 37% from a year ago to 91.6 tons in the first nine months.