The World Gold Council anticipates lower demand during the Dhanteras-Diwali period as a combination of factors such as rising prices, lack of liquidity and impeding elections in key states.
Total demand in the July-September quarter rose to 183.2 tonnes from 165.8 tonnes in the year-ago period. While jewellery demand at 148.8 tonnes grew 10 per cent, investment demand at 34.4 tonnes grew 11 per cent during the quarter. In value terms, gold demand went up 14 per cent to Rs 50,090 crore from Rs 43,800 crore a year ago.
“A dip in the gold price in the early part of the quarter — its lowest level since January 2018 — spurred demand. However, the rupee’s depreciation impacted the local price and demand eased towards the later half of the quarter,” said Somanundaram PR, managing director, India, World Gold Council.
According to the council, a combination of factors such as lack of buying occasions, disruption caused by the floods in a key gold market (Kerala) and an intervening inauspicious period affected demand.
“The last quarter of the year (October-December) is normally a vibrant period for gold related purchases as demand rises in the festival and wedding season. However, the seasonal spike in demand could be moderate this year because of factors such as a lack of liquidity, rising Indian prices and impending elections in some key states impacting trade logistics,” Somasundaram said.
The council estimates Indian gold demand to be at the lower end of 700-800 tonnes in the whole of 2018. A quarterly report noted that after minor purchases over recent months, the RBI ramped up its buying in the September quarter, increasing reserves by 13.7 tonnes. “This brings year-to-date purchases to 21.8 tonnes,” it said.
Total gold recycled in the country declined 13.85 per cent to 23 tonnes compared with 26.7 tonnes in the same quarter of 2017.
Global gold demand rose by just 1 per cent during the third quarter to 964 tonnes on account of large outflows in gold-backed exchange-traded funds, the WGC said on Thursday. Overall demand a year ago stood at 958 tonnes, according to WGC’s Q3 Gold Demand Trends report.