After a 10 per cent jump in the September quarter, the country’s gold demand is likely to remain subdued in the final quarter of the calendar year.
The prices are being quoted for over a month at a discount of Rs 50-100 per 10g. Also, jewellery makers are offering a big discount on making charges, a majority quoting seven per cent, with some adding freebies.
Having discounts and freebies during the festival and wedding season is something new. It seem to indicate apprehension among consumers over purchase, due primarily to the absence of supporting fundamentals. Other asset classes such as stock markets or fixed deposits remain more attractive. The appeal as hedge against inflation is also absent, due to low pressure on prices.
“While wedding season demand would continue, the volume of purchase might not be as high as earlier seasons. We estimate gold demand might not surpass the 240 tonnes of last year’s December quarter but stay higher than in the September one,” says Somasundaram P R, managing director for the India office of the World Gold Council.
Gold demand in the September quarter was 183.2 tonnes, compared to 165.8 tonnes in the same period last year.
Till recently, prices were around Rs 32,000 per 10g (plus another Rs 1,000 with a three per cent goods and services tax. Over recent days, it has fallen to around Rs 31,000 per 10g, seemingly not attractive enough for consumers.
“We see Rs 28,000 per 10g as a good entry point for new consumers,” said Somasundaram.
Digital gold has been preferred by investors this festive season. MMTC-PAMP, along with its nearly a dozen of franchise retailers, have enrolled nearly 11 million customers for its digital gold segment since its launch nearly two years ago.
“The concept has really picked up among new-age customers. Consumers are opting for digital gold as a safe investment avenue. We are looking to add 4 million, to take our customer base to 15 million in the next couple of months,” said Arjun Raychoudhary, managing director at MMTC-PAMP, the sole London Bullion Market Association-accredited precious metals refinery in India.
The country’s annual demand is estimated to remain at around 700 tonnes for this calendar year.