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Gold demand in India was down 39 per cent at 204 tonnes in the June quarter even as prices fell two per cent to ₹24,778 per 10 grams compared to ₹25,381 logged in the same period last year.
In value terms, demand dipped 41 per cent to ₹50,564 crore (₹85,534 crore).
Jewellery demand was down 18 per cent at 154.5 tonnes and in value terms, it dropped 20 per cent to ₹47,716 crore.
Despite drop in prices, gold recycling was up at 16 tonnes against 10 tonnes in the same period last year. The World Gold Council has revised its annual demand target to 850-950 tonnes in 2014 from 900-1,000 tonnes estimated at the start of the year. In the first half of 2014, the country bought 395 tonnes of gold and this is expected to increase with most festivals falling in the second half.
In line with the falling demand, gold imports were down at 224 tonnes against 352 tonnes shipped in the June quarter of 2013. With the import duty of 10 per cent and curbs on imports, the Council expects smuggling to increase and account for 200 tonnes this year.
Causes Somasundaram PR, Managing Director, World Gold Council said, the fall in demand was largely due to the base effect and high inflation, leaving little money in the hands of customers to invest in gold.
“Last year was an exceptional year as far gold was concerned. India bought 310 tones of the yellow metal in June 2013 with prices falling suddenly after a sustained bull run. The General election during the quarter also restricted movement of gold,” he said.
Global picture The Council expects the demand to remain within range with other investment avenues, equity markets especially, delivering better returns.
Global gold demand was down 16 per cent at 964 tonnes (1,148 tonnes) with sharp drop in demand from both China and India, the two major countries driving gold demand. China demand was more than halved to 208 tonnes (425 tonnes). The global demand dipped despite the central banks across the globe increasing their gold purchase to 118 tonnes (92 tonnes) in the June quarter, a rise of 17 per cent.
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