|
| Third quarter gold demand halves |
| BS Reporter / Mumbai Nov 20, 2009, 00:11 IST |
|
High prices along with floods and poor monsoon led to the fall
 India’s gold demand fell 49 per cent in the third quarter of the current calendar year due to high prices and a poor monsoon that hit consumer spending.
According to the World Gold Council (WGC), total gold demand in India, the world’s largest consumer, fell to 137.6 tonnes in the third quarter ended September from 271.2 tonnes in the corresponding quarter last year. The jewellery demand slumped 42 per cent to 111.6 tonnes while net retail investment demand (bars and coins) plunged 67 per cent to 26 tonnes.
However, in comparison with the second quarter, the demand improved from the exceptional lows seen earlier in the year.
High prices continued to remain the biggest reason for the poor jewellery demand, along with floods and poor monsoon in some areas, which reduced incomes in rural areas.
“Consumer and retail demand in India has been hit by high prices this quarter. While consumers are still adjusting to a higher pricing environment, there is awareness about gold’s role as a store of value. As a result, we are seeing less distress selling as consumers look to preserve their wealth in the face of the ongoing economic uncertainty”, said Aram Shishmanian, chief executive of WGC.
High prices also led to a shift to gemset and costume and imitation jewellery, said the WGC. Investment numbers also recorded a sharp fall from the third quarter last year with high prices deterring both long-term investors and speculative buyers, it said. However, the WGC expects a seasonal improvement in jewellery demand in the fourth quarter.
While the demand might rise relative to the year-ago levels, a poor fourth quarter was likely, said WSG. The underlying trend is expected to remain weak while prices remain both high and volatile.
Having sold significant jewellery earlier this year, consumers had the cash for purchases, said the WGC. It, however, said a reasonable correction in prices would be needed to unleash this pent-up demand.
“The outlook for investment is positive overall, with demand likely to remain supported by economic and currency uncertainty, inflation concerns and search for diversification. We expect to see central banks diversifying their dollar exposure in favour of the proven store of value represented by gold,” Shishmanian said.
Meanwhile, the global demand was 800.3 tonnes (valued at $24.7 billion), a 34 per cent decline from the corresponding quarter last year but 15 per cent more than the second quarter as gold’s reputation as a long-term store of value continued to attract investors and consumers.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
