With gold trading at an all-time high in India, consumers stayed away from buying jewellery or even investing in the metal during the September quarter of 2019.
India’s consumption of gold for jewellery was just 54 tonnes, while investment demand fell to the lowest-ever quarterly level of just seven tonnes, According to the GFMS Gold Survey, Q3 2019 released today. The survey is based on the calendar year.
Jewellers have not increased gold purchases for making ornaments, anticipating lower demand. Fabrication demand was as low as 62 tonnes.
Debajit Saha, Senior Analyst-Precious Metals Demand, GFMS, India and UAE, said, “Investment demand was hit hard. In fact, demand was the worst ever, as there were few who were interested in investing in gold at the prevailing high price. Demand slumped by 74 per cent year-on-year in Q3 (calendar year) to an estimated 7 tonnes.”
The survey explains that wedding offtake is the largests component of demand for gold jewellery. Since very few marriages take place during the third quarter, as the period it is not regarded as auspicious, demand generally remains low. However, it rarely drops to the level seen this time unless there is some major disruption. A similar situation prevailed in Q2 of 2016. At that time, demand was down to about 74 tonnes following several compliance measure announced by the government.
The worsening demand for jewellery has already started impacting the job market for ‘karigars’ or goldsmiths. Says Saha: “Many of these karigars have had little or no work in recent months, as manufacturers have had to curtail production as a result of the material slowdown. Our field study reveals that around 40 per cent of these job workers have been forced out of the industry and are now doing other odd jobs for their livelihood.”
These karigars are essentially casual workers with no employee benefits that regular employees covered under labour laws enjoy.