Gold demand declined by a steep 12 per cent in the first quarter of 2018 to 115.6 tonnes due to higher prices and poor investment demand, the World Gold Council (WGC) has said.

In the March 2017 quarter, the demand had stood at 131.2 tonnes, WGC said in a report.

In terms of value, demand fell 8 per cent to Rs 31,800 crore from Rs 34,440 crore.

As demand fell 12 per cent, imports plunged by a whopping 50 per cent in the first quarter to 153 tonnes from 260 tonnes a year ago, according to the report.

Jewellery demand dipped 12 per cent to 87.7 tonnes during the quarter from 99.2 tonnes a year ago.

In value terms, jewellery demand dropped 7 per cent to Rs 24,130 crore from Rs 26,050 crore a year ago.

“Decline in demand can be attributed to a number of factors, including the rising local gold prices, a substantial drop in the number of auspicious wedding days this year compared to the previous year, and an anticipation of an import duty cut in the Budget,” WGC India Managing Director PR Somasundaram told PTI.

“The transition to GST, especially by the unorganised sector, also affected demand to some extent,” he added.

He also said the PNB scam impacted the trade sentiment, which somehow got revived by the time of Akshaya Tritiya.

Investment demand plunged 13 per cent to 27.9 tonnes from 32 tonnes in the previous 12-month period. In value terms, gold investment demand stood at Rs 7,660 crore, down 9 per cent from Rs 8,390 crore.

Total gold recycled also declined 3 per cent to 14.1 tonnes from 14.5 tonnes, the report said.

“The first quarter is not naturally a dynamic period for gold in the country as people usually settle their other financial commitments for tax purposes. Moreover, there was also no catalyst like duty cuts to trigger demand,” Somasundaram said.

The 50 per cent decline in imports to 153 tonnes from 260 tonnes was “mainly on account of subdued consumer demand, down-stocking following the GST transitional period and also on expectations of duty cut in the Budget,” he added.

Asked about imports this year, Somasundaram said inward shipment is likely to be on similar lines with demand. For the full year of 2018, he said, gold demand is expected to be in the range of 700-800 tonnes.

“We are positive about demand going forward due to expectation of better monsoon and the resultant higher rural income and an overall better GDP growth. The compliance standard is growing and in the long-run it’s going to be positive and transform the industry,” he said.

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