Despite high prices, India’s gold demand is likely to set a new record this year on high consumer confidence due to the metal’s inherent value and high return on investment. The demand was 750 tonnes in the pre-global economic meltdown year of 2007.
During the third quarter this year (gold follows the calendar year), prices rose 44 per cent in dollar terms and 105 per cent in rupee terms.
“If the current consumer enthusiasm continues for another one-and-a-half months, gold demand will surpass the 2007 level,” said Ajay Mitra, managing director (Asia Pacific) of the World Gold Council (WGC).
Overall demand saw a phenomenal 27 per cent growth to 229.5 tonnes in the third quarter, as compared to 179.6 tonnes in the same period last year. Jewellery demand rose 36 per cent to 184.5 tonnes from 135.2 tonnes a year earlier. In rupee terms, the demand was Rs 33,800 crore, up 67 per cent over the same period of 2009.
The country’s third-quarter net retail buying rose to 45.1 tonnes, an increase of one per cent from 2009. In rupees, the demand was Rs 8,023 crore, an increase of 30 per cent over the same period of 2009.
Total imports during the quarter, according to WGC, rose to 214 tonnes, from 176 tonnes in the third quarter of 2009 and 160 tonnes in the first quarter of the current calendar year.
“The demand for the metal, especially at unsustainable high prices, surpassed our expectations,” Mitra said. Total demand for gold in India rose 79 per cent to 650.4 tonnes in the January-September period, as compared to 363 tonnes in the corresponding period in 2009. Imports in the first three quarters of the current year were 624 tonnes, 65 tonnes higher than the whole of 2009. Jewellery demand grew 73 per cent to 513.5 tonnes, as compared to 297.2 tonnes a year ago.
