Mumbai, Nov. 20: Demand for jewellery may have lost some sheen but is likely to bounce back with the impending wedding season. By then, consumers will also get used to the new price trends.
The World Gold Councils data for the third quarter of this calendar year showed demand for gold jewellery in India dropping 26 per cent to 125.3 tonnes from 168.4 tonnes in the year-ago quarter. Investment in bars and coins fell 18 per cent to 78 tonnes from nearly 96 tonnes in the same period last year.
Though India is the worlds largest consumer of the yellow metal, China nudged ahead in terms of demand for jewellery in the July-September quarter. Demand there rose 13 per cent to 131 tonnes, while investment in gold bars and coins grew 24 per cent to 60.2 tonnes.
For India, the fall has been attributed to sluggish sales in July and August when demand is usually low.
However, subsequently the demand failed to show the usual pick-up as heightened volatility in gold prices, which hit new highs, dampened consumer enthusiasm, the World Gold Council said.
The depreciation of the rupee, that lost around 14 per cent against the dollar during that period, added to the woes of the buyers.
Experts are of the opinion that this could be a temporary trend and a pick-up is round the corner.
The fourth quarter may see an increase in demand for gold here in India as it coincides with the marriage season when huge buying takes place, an analyst said.
Reena Walia, senior analyst (commodities) at Angel Broking, told The Telegraph that a bounceback in demand for gold couldnt be ruled out as buyers get used to the new price trends.
We have seen earlier that when there is a price increase, demand slows down. But once buyers get accustomed to the prices, demand recovers, Walia said.
Walia said while a dearer gold along with the depreciation of the rupee was to be blamed for the drop in demand, the rise in prices saw consumers preferring gold ETFs over holding the yellow metal in the physical form.
A correction is also expected in gold prices and at these levels, buying could come in, she said.