Indian gold demand rebounded to mark a 13% rise in the quarter through September from a year before, outpacing an 8% rise globally, as a drop in the precious metal's prices stoked fresh purchases, according to the data released by the World Gold Council (WGC) on Thursday.
Having crashed by almost 25% in the June quarter, Indian gold demand rebounded to mark a 13% rise in the quarter through September from a year before, outpacing an 8% rise globally, as a drop in the precious metal’s prices stoked fresh purchases, according to the data released by the World Gold Council (WGC) on Thursday. At 268.1 tonne, the demand in India in the September quarter also exceeded that in China (239.9 tonne) for the first time in the past one year, showed the data.
Still, the WGC trimmed its demand forecast for India to 850-950 tonne for the calendar year 2015, down from the lower band of the 900-1,000 tonne predicted earlier this year. However, demand will be much higher than the 811 tonne in 2014.
Explaining the rationale for the downward revision, WGC managing director (India) Somasundaram P R told FE: “Since some people advanced their purchases before the peak of the festival season to take advantage of the price drop, the (year-on-year) growth in demand in the current quarter through December may not be as high as that of the September quarter. Hence, we revised down our previous forecast a bit. Nevertheless, demand will rise in the December quarter from a year earlier.”
In the first three quarters of the calendar year, demand rose just 1% to 614.6 tonne, thanks to the massive fall in the June quarter.
The widely-tracked spot gold prices in London plunged to their lowest in five years on July 24, as investors exited exchange-traded products on fears of a likely increase in the US interest rate, which would strengthen the dollar and reduce the appeal of gold as a hedge against inflation, and also make the precious metal less competitive against yield-bearing securities such as Treasurys.
Worldwide demand hits two-year high
Gold demand worldwide touched a two-year high of 1,120.9 tonne in the September quarter, after hitting a six-year trough in the previous quarter, thanks to a surge in purchases in India, China, the US and West Asia, showed WGC data. “There is no doubt that a dip in gold prices gave people who were sitting on the sidelines a real opportunity to enter the market,” said Alistair Hewitt, head of Market Intelligence at the WGC.
Though China and India remain the dominant figures, accounting for close to 45% of global demand, what was particularly noticeable in the September quarter is that the consumer response to the price dip was a truly global occurrence, Hewitt said.