The Hindu Business Line : H1 gold consumption down on high prices

The details Consumption for industrial and dental purposes also declined to 14 from 18 tonnes.
The rise in prices, however, has resulted in retail investment rising during the last two years.
The trend in the country in line with the global trend.

Chennai , Aug. 17

A47 per cent rise in gold prices during the first half this year resulted in the consumption of the yellow metal in the country declining by 34 per cent, primarily in the jewellery segment.

According to the World Gold Council (WGC), total consumption declined to 328 tonnes against 498 during the same period a year ago.

In the case of demand for jewellery, the demand was down by almost half to 235 tonnes from 404 a year ago. It was also lower than the 255 tonnes consumed during the corresponding period in 2004.

The WGC said price movements during the second quarter were exceptionally volatile, "having a demonstrable impact on jewellery demand in tonnage terms".

Consumption for industrial and dental purposes also declined to 14 from 18 tonnes, though it was higher compared with 12 tonnes in 2004.

The rise in gold prices, however, has resulted in retail investment rising during the last two years.

From a demand 45 tonnes for retail investment, it has increased to 80 tonnes during the first half. Last year, during the same period, the figure was 78 tonnes.

In terms of value, consumption for jewellery declined by 16 per cent to Rs 20,227 crore from Rs 24,228 crore.

Compared with 2004 period, it was higher by 37 per cent.

Net retail investment value saw a 50 per cent jump at Rs 6,847 crore compared with Rs 4,567 crore.

Demand for industrial and dental purpose was up 9 per cent at Rs 1, 155 crore.

But overall demand in value terms was down at Rs 28,299 crore against Rs 29,846 crore last year.

The trend in the country is in line with the global trend.

Demand

Globally, jewellery demand declined 23 per cent to 1,090 tonnes.

Net retail investment worldwide also declined 22 per cent to 180 tonnes but most importantly, demand for exchange-trade and other similar funds were up 70 per cent at 148 tonnes.

Compared with 2004, both in terms of value and tonnes, demand from funds has increased by over 600 per cent.

WGC said the rise in gold prices saw scrap supply increasing by 57 per cent.

Lower central bank sales and de-hedging added to supply side problems, it added.