Bucking the global trend, gold demand in India increased nine per cent in the September quarter to 223 tonnes (205 tonnes). In value term it was up 27 per cent to Rs 65,373 crore, largely due to the rupee depreciation against the dollar, according to the World Gold Council (WGC) data released on Thursday.

Global gold demand dropped 11 per cent to 1,085 tonnes in the third quarter, while in value terms it was down 14 per cent at $57.6 billion. This was largely due to lower demand in the US and Europe. The average gold price fell three per cent to $1,652 an ounce.

In India, restocking by traders and jewellers in anticipation of the festive and wedding demand and late revival of the monsoon boosted gold demand.

Jewellery demand jumped seven per cent to 136 tonnes, while in terms of value it was up 25 per cent to Rs 39,880 crore.

Investment demand was up 12 per cent at 87 tonnes. It was valued at Rs 25,493 crore, a jump of 27 per cent. Gold Exchange Traded Funds (ETF) has seen a record influx of Rs 500 crore in the September quarter.

Speaking to Business Line from London, Marcus Grubb, Managing Director – Investment, WGC, said the revival in demand is expected to continue with the peak festive and wedding season falling in the fourth quarter of this year.

“Though prices are expected to remain stable, rupee movement against the dollar will play a crucial role and will remain the major risk determining demand in Q4. The recent gain in the dollar against the rupee has pushed up gold prices and is still trading at a premium in the Mumbai bullion markets,” he added. The average gold price in the third quarter was up 17 per cent at Rs 29,302 for 10 grams (Rs 25,100).

Largest consumer

India has toppled China to emerge as the largest gold consumer. In the third quarter of 2012, China recorded eight per cent drop in demand at 177 tonnes (191 tonnes) due to economic slow down. Jewellery demand was down five per cent at 124 tonnes as retailers reduced their inventory. The investment demand was down 12 per cent at 53 tonnes. Both India and China account for 55 per cent of the global gold demand.

“It is going to be a close call between India and China in their race to top global gold demand table this year. Though demand has slowed down in China, we have to wait and watch as sales in China peaks during the fourth quarter,” said Grubb.

suresh.iyengar@thehindu.co.in

(This article was published on November 15, 2012)
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