New Delhi: It is an irony of ironies. The gold demand in India has slumped 32 per cent to 123.9 tonnes in the September quarter. Reason: Higher prices and economic slowdown has reduced the appetite for the yellow metal, according to a report.
The country, which is the second largest consumer of the yellow metal after China, recorded a 66 per cent fall in gold imports to 80.5 tonnes during Q3 of 2019, as against that in the year-ago period.
The decline in imports was more steep, as jewellers met their demand with old imported stock and recycling, the Gold Council said Tuesday. In domestic market, gold prices had peaked to Rs 39,011 per 10 gm in September and are now ruling at Rs 38,800 per 10 gm.
During the first nine months of 2019, the country's cumulative gold demand declined to 496.11 tonnes from 523.9 tonnes during January-September period of 2018. The 2018 full year gold demand stood at 760.4 tonnes, the report said.
Similarly, the cumulative gold import declined to 502.9 tonnes in the first nine months of 2019 from 587.3 tonnes in the year-ago. During the full year of 2018, India's gold imports had stood at 755.7 tonnes.
"When demand is low, people recycle gold. Recycled gold in India rose to 90.5 tonnes in the first nine months this year, as against 87 tonnes during the full year of 2018. This is going to be one of the highest year of recycling," explains world Gold Council India Managing Director Somasundaram.
He also pointed out that the domestic gold market went into a deep discount due to poor demand in Q3. "Gold was sold at a discounted price of up to USD 45 per ounce, but the rate later came down to USD 2 per ounce during Diwali."
The other reason for lower imports, according to Somasundaram, was that traders were destocking due to inventory build-up.Going forward in Q4, the WGC India chief said that high prices of gold will continue, but it would take still longer time for consumers to get used to such rates.
Some wedding buying will happen and it is picking up. But it will not be higher than that last year because of high prices, he said.
