Total domestic jewellery demand in Q3 2019 decreased 32 percent YoY to 101.6 tonne
Demand for gold in India fell by 32 percent in the third quarter (July-September) of 2019 on the back of weak consumer sentiment and high prices, according to a report by the World Gold Council.
Demand for gold in India in Q3 2019 stood at 123.9 tonne as against 183.2 tonne in the same quarter a year ago. In terms of value, the gold demand stood at Rs 41,297 crore, down 18 percent YoY.
The quarter gone by also witnessed a drop in jewellery demand and investment demand but recycled gold in India showed an uptick. Total domestic jewellery demand in Q3 2019 decreased 32 percent YoY to 101.6 tonne.
Explaining the reasons for the drop in demand in Q3, Somasundaram PR, Managing Director, India, World Gold Council, said, “Despite a step-up in buying during Akshaya Tritiya in Q2 (April-June), the absence of any major festivals, monsoon and intervening inauspicious period like Pitru-Paksh muted demand.”
As per Hindu religion, Pitru-Paksh is an inauspicious 16-day lunar day period when Hindus pay homage to their ancestors and avoid buying gold during that period.
He said the drop this year is one of the lowest Q3 falls since 2005.
Several indicators such as lower sales volumes reported by large fast-moving consumer goods (FMCG) companies and domestic car/two-wheeler sales pointed towards a slowdown in both urban and rural demand.
During Q3, prices breached the Rs 35,000 per 10 gram level in mid-July and touched Rs 38,795 by the end of August. It touched a fresh high of Rs 39,011/10 gm during the first week of September.
According to Somasundaram, the two-month leap of around Rs 5,000/10 gm from Rs 34,006 at the end of June caught consumers completely off-guard, prompting many consumers to delay buying. “Demand was further dented by the 2.5 percent rise in the custom duty on gold to 12.5 percent,” he stated.
Consumers preferred gold-to-gold exchanges, which accounted for 50-60 percent of purchases on an average, while retailers wound down existing stocks. Wedding-related purchases provided some support during the quarter.
Total recycled gold in Q3 stood at 36.5 tonne, up 59 percent from a year ago.
World Gold Council expects India 2019 full-year gold demand to be in the 700-750 tonne range.Global demandAt a time when demand for gold in India fell, globally it rose albeit modestly. Global gold demand rose to 1,107.9 tonne in Q3, a three percent rise compared to last year, on a surge in inflows into exchange-traded funds.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.