Huge price volatility has dampened the demand for gold jewellery in the country. Jewellery demand declined by 26 per cent to 125.3 tonnes in July-September 2011 mainly due to retailers selling off their stocks following volatility in gold prices, World Gold Council (WGC) said today.
“The third quarter of 2011 has seen some difficult times for gold, not just in India but around the world. The decline in jewellery demand is mainly due to retailers reducing their inventory following price volatility,” WGC Managing Director (Middle East and India) Ajay Mitra said after releasing a report, ‘Gold Demand Trends Third Quarter 2011’. Gold prices had crossed Rs 29,000 per 10 grams and came close to the Rs 30,000 mark recently.
In value terms, however, demand was marginally higher by 2 per cent at Rs 31,450.30 crore for the quarter under review compared to Rs 30,858.88 crore in the same period last year. “The drop in demand was mainly in urban areas while in semi-urban and rural areas it was good. As 60 per cent of the total business is rural driven, it was good,” he said.
Investment demand, comprising bars, coins and ETFs, during July-September also dropped by 18 per cent to 78 tonnes against 95.5 tonnes in the same quarter in Calendar Year 2010. But in value terms, investments in Q3 went up by 12 per cent to Rs 19,578 crore compared to Rs 17,495 crore in the same quarter last year, according to the report.
Going ahead, Mitra said, “We expect positive sentiments as the wedding season in which major jewellery buying takes place, falls in Q4 of CY’11.” Imports also dipped by 20 per cent to 200 tonnes from 250 tonnes in the same quarter last year. Standard gold (99.5 purity) declined by Rs 175 per 10 grams to end at Rs 28,965 from Wednesday’s close of Rs 29,140 in Mumbai on Thursday.