Gold & Silver

Gold demand to remain flat due to high prices

Our Bureau Mumbai | Updated on November 01, 2018 Published on November 01, 2018

The World Gold Council expects gold demand this year to remain flat in India, at about 700 tonnes, and marginally lower than the 771 tonnes logged in the previous year on the back of high prices denting consumer sentiments.

Total demand in the first three quarters of this year was down 1 per cent at 524 tonnes (529 tonnes). However, demand in the September quarter was up 10 per cent at 189 tonnes, boosted by the sudden dip in prices during the start of the quarter and lower base effect with the launch of GST last year. Jewellery demand was also up by 10 per cent at 149 tonnes.

In value terms, gold demand was up 14 per cent at ₹50,090 crore while jewellery demand increased to ₹40,690 crore.

Somasundaram PR, Managing Director, World Gold Council, said the seasonal spike in demand during Dhanteras and Diwali could be moderate due to the spike in prices, lack of liquidity and impeding elections in key states impacting trade logistics. Overall full-year gold demand will be at the lower end of the 700-800 tonne range, he added.

A dip in gold prices to the lowest level since January during the early part of the quarter spurred demand. However, the rupee’s depreciation impacted local prices and demand eased towards the latter half of the quarter, he said.

Gold prices were up 4 per cent at ₹27,345 per 10 grams while in dollar terms the price was down 5 per cent to $1,213 an ounce (about 28 grams).

Gold imports increased 60 per cent to 237 tonnes as some of the jewellers took advantage of the lower tariff value fixed by the government in the fortnight post the sharp fall in prices in July. Tariff value, which is the average of the last 15 days’ price movement, is reset to calculate import duty.

Despite being the peak festive season, Somasundaram said gold is being sold at a discount of $5.5 per ounce (₹100 per 10 grams) in the wholesale market.

In a bid to reduce dollar dependence of reserves, the RBI ramped up its gold reserves by 13.7 tonnes to 580 tonnes in the September quarter. The RBI has bought 21.8 tonnes of gold in the first three quarters of this year. In fact, central banks’ gold purchases hit a three-year high of 148 tonnes in the quarter under review.

Published on November 01, 2018
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