Gold demand falls sharply – Know the reasons
Gold demand in India has fallen by 16 per cent in the July-September quarter of the current financial year.
Gold demand in India has fallen by 16 per cent in the July-September quarter of the current financial year. Despite the historic high in gold prices and the resulting lack of consumer buying, gold continues to attract investors as a safe haven, the World Gold Council (WGC) said on Thursday.
According to the WGC report, total gold demand fell from 248.3 tonnes to 209.4 tonnes in the third quarter. However, the value of demand increased by 23 per cent to Rs 2,03,240 crore from Rs 1,65,380 crore, reflecting the rapid rise in gold prices.
In India, the world’s second-largest bullion market, demand for gold jewellery fell 31 per cent to 117.7 tonnes from 171.6 tonnes in the previous quarter. But the value of jewellery purchases remained stable at around Rs 1,14,270 crore as buyers adjusted to the higher prices.
Although gold is expensive, the long-term returns in gold have been outpacing inflation. The bullion market remains optimistic due to the festive season and strong sales during Diwali in October. Although gold sales fell by 16 per cent, the 23 per cent increase in sales value cannot be ignored, said Sachin Jain, regional chief executive officer, India, WGC.
The average gold price in India in the September quarter stood at Rs 97,074.9 per 10 grams, up 46 per cent from Rs 66,614.1 last year. This excludes import duties and goods and services tax. International prices averaged $3,456.5 per ounce, compared to $2,474.3 in the same period last year.
India’s gold imports fell by 37 per cent to 194.6 tonnes from 308.2 tonnes, while recycling fell by 7 per cent to 21.8 tonnes. After a demand of 462.4 tonnes in the first nine months of the current year, gold demand for the full year is expected to be 600-700 tonnes. Global gold demand rose to a record 1,313 tonnes in the third quarter. The global increase was mainly due to purchases and investments by central banks, with the National Bank of Poland being the largest buyer.
Indian consumers are benefiting from the increase in per capita income and disposable income. Many consumers have postponed purchases as prices have risen in recent months. Uncertainty, potential trade wars and countries increasing their gold reserves have continued to drive up gold prices.
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