Gold demand falls 32% in the third quarter due to high prices and economic slowdown: report

NEW DELHI: India's demand for gold fell 32 percent to 123.9 tons in the September quarter due to higher prices and economic slowdown reduced appetite for yellow metal, according to a report.

The country, which is the second largest consumer of yellow metal after China, registered a 66 percent drop in gold imports to 80.5 tons during the third quarter of 2019 compared to the same period last year.

The decline in imports was more pronounced as jewelers satisfied their demand with imported old stocks and recycling, the Gold Council (WGC) said on Tuesday.

In the domestic market, gold prices He had reached a maximum of Rs 39,011 for every 10 grams in September and is now ruling at Rs 38,800 for every 10 grams.

During the first nine months of 2019, the country's cumulative gold demand decreased to 496.11 tons from 523.9 tons during the January-September 2018 period. The demand for gold for the entire year 2018 was 760.4 tons, according to the report.

Similarly, cumulative gold imports decreased to 502.9 tons in the first nine months of 2019 from 587.3 tons in the previous year. Throughout the year of 2018, gold imports from India were 755.7 tons.

"In India, there was decline in gold demand due to two reasons. One was sharp increase in prices by 20 per cent towards the end of Q2 and in Q3. The second reason was that, in various countries including India and China, general economic slowdown affected the consumer sentiment," industry group WGC India Managing Director Somasundaram PR told PTI.

Gold demand fell 32.3 percent to 123.9 tons (including the 101.6-ton jewelry demand and the 22.3-ton bar/coin demand) during the third quarter of 2019, compared to 183.2 tons in the same quarter of 2018, he said after publishing the report.

Somasundaram explained that gold imports also fell due to high prices and lower rural demand. the full year of 2018. This will be one of the highest years of recycling.

He also noted that the national gold market entered a great discount due to low demand in the third quarter. The gold was sold at a discounted price of up to $ 45 per ounce, but the rate was later reduced to $ 2 per ounce during Diwali.

The other reason for lower imports, according to Somasundaram, was that traders were lowering stocks. Since the first quarter of 2017, we have seen that imports have been higher than demand. There has been an increase in stocks of 200-220 tons. When the slowdown occurs, people tend to liquidate stocks, he said.

En el cuarto trimestre, el jefe de WGC India dijo que los altos gold prices continuarán, pero que a los consumidores les llevará aún más tiempo acostumbrarse a tales tasas.

In terms of consumer feelings, I don't think things have improved much because rural anxiety still continues. While demand increased during Diwali and Dhanteras, we don't think it's better than last year, he said.

Some wedding purchases will happen and you are collecting. It will not be higher than last year due to high prices, he said.

Given this context, Somasundaram said that the WGC has revised the estimate of India's total gold demand down to 700-750 tons by 2019 from its previous projection of 750-800 tons.

Most likely, the demand for gold would be at the lower end of the range in 2019. It will be one of the years of low demand. Last time, we saw such a low figure of 667 tons in 2016, he added.

In stating that gold imports will likely be mute and very low in 2019, Somasundaram said that the importation of gold from India will generally reflect demand. It will not be high since recycling will remain high due to high prices.

The country's gold import decreased to 80.5 tons in the third quarter of this year from 236.8 tons in the same quarter of 2018, he added.

According to the WGC report, global gold demand, however, increased to 1,107.9 tons during the third quarter of 2019 from 1,079 tons in the previous year despite the decline in growth in China and India, the two largest consumers of yellow metal in the world.