Discouraged by rising prices, weakening rupee and the GST transition issues faced by the unorganised retailers, India recorded a sharp fall in gold demand in the first quarter of 2018. The demand was down 12 percent at 87.7 tonne compared to 99.2 tonne in the first quarter of 2017, World Gold Council (WGC) report said. This was the third weakest quarter in India’s jewellery market for ten years in wake of weakening rupee that magnified the surge in the international US dollar gold price.
Although the yellow metal was relatively stable when compared with levels a year earlier, jewellery customers were feared greater volatility erupting in the days ahead and held back from buying, the report said.
“The number of auspicious wedding days was far fewer: there were only seven auspicious days in Q1, compared with 22 in the same period of 2017. Given the importance of wedding-related demand to India’s jewellery market, this presented a major obstacle. The softness in the market was reflected by the local gold price, which traded at a small discount to the international price for much of the quarter,” WGC report said.
Worldwide gold demand
The overall gold demand stands at 973.5 tonne which is the lowest in the first quarter since the year 2008. “The main cause was a fall in investment demand for gold bars and gold-backed ETFs, partly due to range-bound gold prices,” the WGC report said. The overall gold demand was at 1,047 tonne in Q1 of 2017.
China was buoyed by holiday spending and the US demand improved on supportive economic backdrop. In bar and coin investment, China, Germany and the US guided weakness resulting in a 15 percent plunge in the global demand to 254.9 tonne.
Demand in technology sector
Gold demand surged in the wireless sector. The sector is significant growth area as facial recognition is increasingly deployed in smartphones, gaming consoles and security systems, the report said.