Mumbai, Aug. 14: Gold demand in India fell 39 per cent to 204 tonnes during the second quarter of the current calendar year over the same period a year ago on expectations of prices going down, according to a World Gold Council (WGC) report.
Consumers had expected the prices to drop to Rs 25,000 per 10 gram, the council said.
The total demand for 2014 is also forecast to remain lower than the previous year.
“Demand tailed off sharply following the elections as the market waited to see whether the newly elected government led by Prime Minister Narendra Modi would relax the import restrictions on gold,” the WGC said.
Though the Reserve Bank of India had subsequently relaxed gold import rules that eased the supply pressure, lack of further relaxations along with a lean purchasing season kept the demand subdued.
Demand during the corresponding quarter of 2013 stood at 337 tonnes, the WGC report said.
In value terms, demand fell 41 per cent to Rs 50,564.3 crore in the second quarter compared with Rs 85,533.8 crore in the same period last year.
The council has also pared the estimates for 2014 even as it expects demand to pick up during the second half, which includes the Diwali and the wedding season.
The WGC expects demand to be around 850-950 tonnes for 2014, lower than the previous estimate of 900-1,000 tonnes. Demand for the precious metal in 2013 stood at 975 tonnes.
According to the council, the progress of the monsoon, which is currently below average, will be an important factor in determining whether investment demand recovers to longer-term average levels towards the end of the year.
However, more than 200 tonnes are expected to flow through the unofficial route. “Such flows (through the unofficial route) are likely to build momentum over the coming months as the market moves into the seasonally stronger period of Diwali and the wedding season,” WGC added.
Demand for jewellery also declined 18 per cent to 154.5 tonnes during the quarter from 188 tonnes in the same period last year.
Total investment demand was lower by 67 per cent at 49.6 tonnes compared with 149 tonnes a year ago.