Gold demand rises 13% to 213 trillion in April-June

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Updated: August 2, 2019 7:09:11 AM

India’s gold demand in second quarter of 2019 grew by a healthy 13% to 213.2 tonne, underpinned by robust trade promotions, a higher number of auspicious days and a positive consumer response to softer prices in April and May, World Gold Council (WGC) said on Thursday.

Akshaya Tritiya purchases along with favourable prices were two major factors driving up demand in first half of 2019.

India’s gold demand in second quarter of 2019 grew by a healthy 13% to 213.2 tonne, underpinned by robust trade promotions, a higher number of auspicious days and a positive consumer response to softer prices in April and May, World Gold Council (WGC) said on Thursday.

However, the price rise in June and an unfounded expectation of an import duty cut in the Budget brought demand to a virtual standstill when the quarter ended.

According to a WGC press release, overall gold demand in India, in the first half of 2019, was 372.2 tonne, 9% higher than first half of 2018 despite a slowing economic environment and restrictions on the movement of cash during the election season.

Akshaya Tritiya purchases along with favourable prices were two major factors driving up demand in first half of 2019.

Meanwhile, the global gold demand grew to 1,123 tonne in the second quarter of 2019, a rise of 8% on the same period last year, according to the WGC’s latest ‘Gold Demand Trends’ report.

Continued central bank buying and sustained growth in gold-backed exchange-traded funds (ETFs) were the key drivers of this increase.

Taken together with the first quarter of the year, gold demand increased to 2,181.7 tonne in the first six months of 2019, an uplift of 8% compared with the first half of last year.

Regarding supply of the commodity , WGC reports that a record 882.6 tonne from gold mine production in second quarter and a 9% jump in recycling to 314.6 tonne, boosted by the sharp June gold price rally, led the growth in supply. Looking at the whole of H1, supply reached 2,323.9 tonne, the highest level since 2016.

Gold price rallied in June, breaking through $1,400/oz for the first time since 2013.

The price rise in some other currencies was even more pronounced.

Among the factors driving this rally were expectations of lower interest rates, political uncertainty with further support coming from strong central bank buying.

The market development organisation for the gold industry reports that total jewellery demand in India for second quarter of 2019 increased by 12% at 168.6 tonne as compared to second quarter of 2018 (149.9 tonne).

The value of jewellery demand was Rs 49,380 crore, up by 17% from Rs 42,000 crore in second quarter of 2018.

Somasundaram PR, managing director, India, World Gold Council said, “We do not expect the hike in customs duty to have a long term impact on gold in India, although it will have a dampening impact on demand in Q3.

“We continue to estimate India’s full year gold demand to be in range of 750 to 850 tonne in 2019”.

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