IIM Bangalore Commodity Insights Yearbook - 2023 MCX IPF

STATISTICS
NON-AGRICULTURAL
COMMODITIES
BULLION
Gold & Silver

BASE METALS
Aluminium, Copper, Lead,
Nickel & Zinc

ENERGY COMMODITIES
Crude Oil & Natural Gas

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BULLION

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IIM Bangalore Commodity Insights Yearbook - 2023 MCX IPF

Regarding major gold-producing countries, China, Australia, Russia, the

United States, Peru, and South Africa are significant players in the global
gold market. India and China jointly account for over 50% of the recent
global gold demand. Notably, there has been a geographical shift in gold
demand, with eastern countries, particularly China and India, overtaking
western countries in gold consumption over the past two decades.

The World Gold Council (WGC) reported that India consumed 774.1 tonnes
of gold in 2022, and the consumption is expected to reach 800 tonnes in
2023.

Central banks play a pivotal role in managing their countries' currencies,

and gold serves as a stabilizing asset, especially during economic
fluctuations. Central banks demand for gold rebounded strongly in recent
years. In 2022, the sector witnessed a second consecutive year-on-year
increase, with net purchases totalling 1,136 tonnes. Notably, the Reserve

BULLION Bank of India added 33 tonnes of gold in 2022, a decline from the previous
year's 77 tonnes. Meanwhile, the People’s Bank of China (PBoC) reported an
increase in its gold reserves for the first time since September 2019, with a
Bullion refers to the purest form of total of 62 tonnes purchased in November and December 2022, bringing its
gold and silver, typically stored as gold reserves over 2,000 tonnes. Additionally, the Central Bank of Turkey
bars, ingots, or coins. It holds recorded the highest buying activity in 2022, increasing its official gold
significant value as legal tender reserves by 148 tonnes to reach 542 tonnes, the highest level on record.
and serves as reserves for central In 2022, China's gold jewellery demand decreased by 15% to 571 tonnes,
banks and institutional investors. falling below its 10-year annual average by 113 tonnes. On the other hand,
Gold, being a rare precious metal, India's jewellery demand remained relatively stable at 600 tonnes, marking
has been highly sought after a 2% decline in 2022, but aligning with the annual average in the decade
worldwide since ancient times due before the COVID pandemic, despite occasional headwinds posed by high
to its ease of minting, smelting, or rising local gold prices during the year.
and fabrication, as well as its
resistance to corrosion, giving it a Silver is the second most significant and widely traded precious metal, with
distinctive colour. a diverse range of applications similar to gold. It finds use in various sectors,
including coins, ornaments, silverware, industrial applications, and
In India, gold and silver hold not pharmaceuticals. The largest share of silver utilization, accounting for about
only investment value but also 55% globally, comes from its fabrication, followed by jewellery, coins & bars,
symbolic, auspicious, and and silverware, which make up 20%, 20%, and 5%, respectively.
sentimental significance. The
demand for gold in India is Leading countries in silver mine production include Mexico, Peru, China,
primarily driven by its use in Chile, and Russia. India has emerged as one of the top three importing
jewelry, followed by retail countries for silver globally. According to the Silver Institute, the year 2022
investments in bars and coins, net witnessed a remarkable surge in total silver demand, following a strong
official use by central banks, and recovery from the previous year. The offtake of silver experienced an
industrial production. As a status impressive 18 percent increase, reaching a total of 1.242 billion ounces. This
symbol, physical gold and silver are growth was observed across various fabrication sectors, with all except
commonly purchased by Indian photographic and brazing alloys demand reaching new record highs. The
households. Consequently, India industrial segment, in particular, stood out in 2022, registering another
ranks as the world's second-largest record demand of 556.5 million ounces of silver. Additionally, silver
consumer of gold, heavily reliant jewellery fabrication witnessed a substantial surge, reaching a record level
on imports to meet domestic of 234.1 million ounces last year, marking an impressive 29% increase. This
demand. growth was mainly driven by India, where a combination of pent-up

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demand, higher purities, and are available for trading on gold receipts (EGRs). This system
significant restocking by retailers commodity exchanges. allows individuals to convert
resulted in volumes doubling Additionally, options contracts for physical gold into EGRs by
compared to the previous year, gold and silver were launched in depositing it at specific delivery
2021. October 2017 and May 2018, centers. These EGRs can then be
respectively, providing further traded on regulated exchanges,
Gold and silver are not only traded
opportunities for trading and providing buyers and investors
in widespread physical markets but
hedging. with a more accessible and
also extensively in derivatives
controlled way to engage in spot
markets worldwide, including Furthermore, in 2020, the first
gold trading.
India, as a means to hedge against bullion-based index futures in
price risk. The prices set by the India, on the index called MCX In July 2022, India established its
London Bullion Market Association iCOMDEX Bullion Index (BULLDEX), first global Gold Exchange, known
(LBMA) are widely used as were successfully launched on the as the India International Bullion
benchmark references for gold and MCX trading platform. Exchange (IIBX), at the
silver globally. Comex (CME Group) International Financial Services
In January 2022, SEBI introduced a
serves as a major international Centre (IFSC) in GIFT City,
framework for the functioning of a
benchmark for derivatives trading Gandhinagar. The aim of this
gold exchange, enabling the
in these precious metals. In India, exchange is to position the country
trading of gold through electronic
futures contracts for gold and silver as a regional bullion hub.

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GOLD
FUNDAMENTALS
Gold Fundamentals (tonnes)
Particular 2017 2018 2019 2020 2021 2022
Global Supply
Mine production 3576 3656 3596 3482 3589 3649
Net producer hedging -26 -12 6 -39 -7 -11
Recycled gold 1112 1132 1276 1293 1136 1141
Total supply 4663 4776 4878 4736 4719 4779
Global Demand
Jewellery fabrication 2257 2290 2152 1324 2230 2192
Jewellery consumption 2241 2250 2127 1398 2148 2090
Jewellery inventory 17 40 25 -74 83 103
Technology 333 335 326 303 330 309
Electronics 266 268 262 249 272 252
Other Industrial use 51 51 50 42 47 47
Dentistry 16 15 14 12 11 10
Investment 1315 1164 1271 1798 1004 1127
Total bar and coin demand 1044 1091 871 905 1193 1237
Physical Bar demand 780 776 584 543 813 804
Official Coin 188 242 221 293 295 334
Medals/Imitation Coin 76 73 67 69 85 99
ETFs & similar products 271 74 400 892 -189 -110
Central banks & other inst. 379 656 605 255 450 1078
Gold demand 4284 4445 4355 3679 4015 4706
Indian Scenario
Total Supply 976 853 777 454 1007 760
Net bullion imports 879 756 647 349 925 651
Scrap 88 87 120 96 75 98
Domestic other sources# 9 11 11 9 7 12
Demand 771 760 690 446 797 774
Bar and coins 169 162 146 130 186 174
Jewellery demand 602 598 545 316 611 601
# Local mine production, recovery from imported copper concentrates and disinvestment.
Source: World Gold Council; Data downloaded on 18th May 2023.

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IIM Bangalore Commodity Insights Yearbook - 2023 MCX IPF

GOLD
FUNDAMENTALS
Gold Fundamentals (tonnes)
2017 2018 2019 2020 2021 2022
Major producing countries (mine production)
China 429 404 383 368 332 375
Russia 281 295 327 332 331 325
Australia 293 313 325 328 307 314
Canada 171 192 185 173 193 195
United States 236 223 200 193 187 173
Ghana 133 149 142 130 125 127
World 3576 3656 3596 3482 3581 3628
Major Consuming Countries
China 972 994 849 613 959 789
India 771 760 690 446 797 774
United States 159 154 151 187 265 252
Germany 117 107 96 166 174 196
Turkey 94 74 89 147 95 122
World 3285 3341 2998 2303 3341 3327
Jewellery demand from major countries
India 602 598 545 316 611 601
China 665 686 638 414 673 571
United States 124 128 131 118 149 144
UAE 47 36 34 21 34 47
Saudi Arabia 44 39 37 23 33 38
World 2241 2250 2127 1398 2148 2090
Reserves (gold) of central government
United States 8133 8133 8133 8,133 8,133 8133
Germany 3372 3367 3366 3,362 3,355 3355
Italy 2452 2452 2452 2,452 2,452 2452
France 2436 2436 2436 2,436 2,437 2437
China 1843 1927 1948 1,948 1,948 2076
India 558 600 635 677 769 795
World 33735 32640 32833 35395 34767 35695
Source: World Gold Council, USGS Mineral Commodity Surveys.

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IIM Bangalore Commodity Insights Yearbook - 2023 MCX IPF

GOLD
FUNDAMENTALS
Major Import Sources and Export Destinations of Gold# (USD billion)
2017 2018 2019 2020 2021 2022
Country Value Country Value Country Value Country Value Country Value Country Value
Major Importing Countries
Switzerland 69.8 Switzerland 63.3 UK 70.8 UK 88.3 Switzerland 92.3 Switzerland 99.0
India 36.2 India 31.8 Switzerland 60.6 Switzerland 87.9 India 55.8 China 76.7
UK 34.5 UAE 27.7 India 31.2 USA 34.7 UK 53.7 UK 41.8
China, Hong 29.4 UK 25.6 China, Hong 14.0 Turkey 25.2 UAE 48.2 China, Hong 38.0
Kong SAR Kong SAR Kong SAR"
Turkey 16.6 China, Hong 23.6 Turkey 11.3 India 21.9 China 47.3 India 36.6
Kong SAR
Major Exporting Countries
Switzerland 67.9 Switzerland 64.0 Switzerland 61.9 Switzerland 71.6 Switzerland 86.7 Switzerland 100.2
China, Hong 52.2 China, Hong 37.2 China, Hong 25.2 China, Hong 41.3 UK 41.4 UK 72.7
Kong SAR Kong SAR Kong SAR Kong SAR
USA 19.8 UK 31.8 UK 23.3 UK 21.4 UAE 33.8 USA 37.2
UK 17.0 USA 20.3 USA 17.2 USA 20.6 China, Hong 30.8 China, Hong 30.1
Kong SAR Kong SAR
Canada 13.2 UAE 15.7 Australia 16.2 Australia 17.6 USA 27.7 Australia 16.3
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Major Importing Sources for India (USD million)
Switzerland 17162.2 Switzerland 15221.4 Switzerland 14,466.94 Switzerland 16275.8 Switzerland 20740.3 Switzerland 12642.4
UAE 3535.7 Ghana 3018.0 UAE 2,706.52 UAE 4194.9 UAE 5839.5 South Africa 3360.1
Ghana 2392.3 UAE 2508.2 Peru 1,423.66 South Africa 2549.4 Guinea 3316.5 UAE 3089.2
USA 2099.9 Peru 2207.4 South Africa 1,367.01 Peru 1499.1 South Africa 3259.8 Bolivia 2544.8
Peru 1775.3 USA 2126.7 USA 1,365.26 Guinea 1431.7 Peru 2313.9 USA 1881.3
Major Exporting Destinations of India (USD million)
UAE 1499.9 Singapore 20.5 Switzerland 55.86 Switzerland 192.92 Hong Kong 2.81 UAE 71.93
Turkey 0.04 Guinea 0.18 South Africa 18.63 Turkey 63.13 UAE 1.95 Switzerland 54.33
- - UK 0.04 UAE 6.22 Guinea 0.52 Switzerland 1.15 Turkey 19.21
- - Germany 0.03 Hong Kong 0.01 UAE 0.43 Guinea 0.26 Hong Kong 0.36
- - UAE 0.01 - - Hong Kong 0.16 Peru 0.05 China P RP 0.02
# Includes gold unwrought, semi-manufactured, powder form (HS Code 7108).
Source: UN Comtrade Database, Export-Import databank of India.

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Gold Prices and US Interest Rates

Source: WGC and Federal Reserve Bank of St Louis

Gold Prices and Equity Trends

Source: WGC and Federal Reserve Bank of St Louis

Gold Prices and Dollar Index

Source: WGC and Federal Reserve Bank of St. Louis

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