India's Gold Consumption in 2022 Drops 3% Amid High Prices Rally: World Gold Council

India's gold consumption in 2022 fell 3% from a year earlier, as a rally in local prices to near-record highs.

New Delhi: India's gold consumption in 2022 fell 3% from a year earlier, as a rally in local prices to near-record highs curtailed bullion demand during the key December quarter, the World Gold Council (WGC) said on Tuesday. Lower consumption in the world's second-biggest gold buyer could weigh on global prices, but help in bringing down India's trade deficit and support the ailing rupee .

India's gold consumption declined to 774 tonnes last year as demand dropped 20% to 276.1 tonnes in the December quarter, the WGC said in a report. In the March 2023 quarter, gold consumption could improve on the back of a pick-up in rural demand amid elevated prices of summer-sown crops and a higher number of auspicious days for weddings, the council said.

Two-thirds of India's gold demand usually comes from rural areas, where jewellery is a traditional store of wealth. Gold is an essential part of the bride's dowry in India and also a popular gift from family and guests at weddings.

"Demand will, however, continue to face headwinds from the higher domestic gold price and persistently high rural inflation," the WGC said.

Local gold prices hit an all-time high of 57,149 rupees ($699.63) per 10 grams in January. The rally in gold prices prompted some investors to sell gold, while some consumers exchanged old gold jewellery for new, which lifted gold recycling in India by 30% to 97.6 tonnes in 2022, the WGC said.