Gold demand slumps 32% in Q3, likely to hit three-year low

Gold demand in the country declined 32 per cent in the July-September quarter to 123.9 tonnes. This makes it one of the lowest in third quarters since 2005 and the lowest quarterly demand since the second quarter of calendar year 2016.

Cumulative gold import declined 66 per cent in the quarter to 80.5 tonnes, from 236.8 tonnes in the same period a year before. Import of unrefined gold or dore was down 90 per cent to only 6.7 tonnes.

Even a large part of the jewellery demand was met by selling old jewellery. During the quarter, investment demand plunged by 35 per cent from the same period a year before, from 34.4 tonnes to 22.3 tonnes.

A World Gold Council (WGC) demand trend report, issued on Tuesday, says: “Indian consumers preferred gold-to-gold exchanges, which accounted for an average of 5060 per cent of purchases, while retailers wound down existing stocks.” Old gold sold without exchange was also 59 per cent higher in the quarter, to 36.5 tonnes. Gold supply from domestic sources set a new record at 120 tonnes on an annualised basis, breaching its previous best of 118 tonnes in calendar 2012. For the full calendar year, the WGC has forecast India’s gold demand at around 700 tonnes. It was 760 tonnes last year.

For this year's three quarters ending September, cumulative gold demand was 5.3 per cent less at 493 tonnes, as compared to 523.9 tonnes in the comparable period last year.

China’s gold demand fell 25 per cent, says WGC, to 199.1 tonnes. Demand was largely from institutional investors.

“The demand in India declined by 32 per cent in the third quarter, primarily due to weak consumer sentiment and high prices. Despite a step-up in buying during Akshaya Tritiya in the second quarter, the absence of any major festivals, monsoons and intervening inauspicious period like pitru paksha led to the muted demand,” said Somasundaram P R, managing director at WGC'S India arm.