India’s demand for gold nosedived by 45 per cent in the second quarter of the 2008 calendar year on high and volatile prices, according to the latest report by the World Gold Council.
The quarter saw a total demand of 161.4 tonnes as compared to 296.1 tonnes in the comparable period last year. The jewellery sector witnessed a fall in demand of 47 per cent to 118 tonnes from the all-time high demand of 223.1 tonnes in the corresponding period last year. Net retail investment demand slumped 41 per cent to 43.4 tonnes.
| FADED SHOW |
During the quarter, global economic downturn infected consumer sentiments, with inflation at a 13-year high.
Combined with a subsequent rise in interest rates, this effected in reducing disposable income and discouraging consumers from spending on gold jewellery, which declined 28 per cent to Rs 14,170 crore, the report said. Continued price volatility was an added deterrent to gold jewellery demand in the quarter.
While the correction in gold price from the first quarter record-highs was positive, the instability in the price encouraged many consumers to adopt a wait-and-watch policy, which was also reflected in the jewellery trader’s reluctance to commit to high inventory levels.
The Akshaya Tritiya festival in May, considered an auspicious day in the country to buy gold and other precious metals, provided some positive vibes in an otherwise gloomy quarter, though the volume of sales generated by the festival was lower this year to around 50 tonnes.
Also Read
Consumer demand for the first six months of the year was 263.5 tonnes, compared with 498.3 tonnes in the first half of 2007. Of this, jewellery demand accounted for 189.1 tonnes and retail investment 74.4 tonnes.
Bloomberg adds: Global demand fell 19 per cent in April- June quarter to 735.6 tonnes from 905.7 tonnes a year earlier, WGC said. Purchases for jewellery fell 24 per cent and sales to India plunged 45 per cent, the group said. The country accounted for 27 per cent of gold demand in 2007.