Politics

Gold demand at 8-year low in October-December: WGC

CHENNAI: High gold prices during October-December quarter of 2019 pushed gold demand to an 8-year-low, when consumption was 194.3 tonnes, data from World Gold Council showed.
Traditionally a high-demand period, the quarter which saw Diwali and the start of the wedding season, witnessed gold lose its sheen owing to 20% higher prices compared to the previous year.
Jewellery demand stood at 149 tonnes, down 17% from 180 tonnes and the demand for investment dropped by 20%. The data from the council showed that gold demand for calendar year 2019 also fell 9% by volume, because of subdued demand in the second half of the year.
“By volume, India’s annual gold demand was at 690 tonnes — lower than our outlook of 700-800 tonnes — primarily because of a sharp surge in prices of over 20% in H2. Growth in H1 was followed by a sharp drop in Q3. Diwali and Dhanteras revived hopes but the volatility coupled with a higher price bar impacted demand, in the lower and middle price bands,” said PR Somadundaram, managing director India, World Gold Council.
Jewellers witnessed up to a 30% drop in demand on an average in Q4 and was restricted to necessary purchases for weddings and other occasions.
“The demand in the first half was good and since June, when the prices began to shoot up, it dropped and on average in the second half, we saw a 25%-30% drop in demand,” said Anantha Padmanabhan, MD, NAC Jewellers and chairman, All India Gems and Jewellers domestic council.
Looking forward, jewellers are expecting the upcoming budget to reduce import duty on gold from the current 12.5% to at least 10% which would inturn help salvage the demand situation.
“As policy measures unfold, broader economic growth accelerates and local prices of the past 6 months become more acceptable among households, India’s gold demand will be in the range of 700-800 tonnes in 2020,” said Somasundaram.

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