The Hindu Business Line : Q3 India gold demand up 16%; global offtake slips

Events that unfolded
Retail investment in gold increased seven per cent globally and 31 per cent in India
Industrial usage increased five per cent
Retail jewellers reported strong sales in September

Chennai , Nov. 15

Demand for gold in the country increased 16 per cent during the July-September quarter to 164.8 tonnes, even as global demand slipped three per cent in tonnage terms.

According to the World Gold Council, demand for jewellery in the country increased 12 per cent, while globally it declined four per cent. However, retail investment in gold increased seven per cent globally and 31 per cent in India.

In a press release on Wednesday, the council said the demand during the third quarter witnessed a dramatic shift in line with spending patterns during the first half of the year. Consumer demand saw a surge in September when prices dipped below $600 a ounce with offtake being vibrant in jewellery and retail investment during the last few weeks of the month.

The demand was, in particular, witnessed in the Gulf and rest of Asia.

With the exception of industrial usage, demand in tonnage globally was down compared with the last year's third quarter. Investment in gold declined 10 per cent but industrial usage increased five per cent with electronic demand setting a new record for the quarter.

Gold price during the quarter was 41 per cent higher compared with the same period last year.

"It is encouraging to see that consumers have become comfortable with prices in the $570-600 range, in the same way they adapted to the range of $420-440 in the first half of 2005," the release quoted the council Chief Executive, Mr James Burton, as saying.

OVERALL HOLDINGS

During July and August, overall holdings in gold-backed exchange traded funds gained but in September, it slid a tad. "This once again indicates that the funds are primarily being bought by long-term investors," Mr Burton said.

He also said the council was encouraged by the strong performance in industrial demand for gold, which accounts for 12 per cent of the total demand.

Retail jewellers reported strong sales in September and during the lead-up to the peak Diwali season as prices remained stable. Globally, the quarter is seen weak for jewellery but during July-September, it increased to 592 tonnes, higher than 521 in the first quarter and 556 in the second.

On the outlook for the current quarter, the council said there was strong resistance to prices above $600.