As per the World Gold Council (WGC), the demand for gold in India in the year 2019 slumped 9% to 690.4 ton, which is the lowest in three years. The quarter ended in December 2019 saw demand falling 18%, there was demand only for 194.3 ton. This has happened amidst the festive season, raising severe doubts on consumption.
The previous quarter was the second-worst for the gold demand in India in ten years. The second half of the year 2019 was the worst bi-annual performance in a decade. The reduction in the demand for gold in India indicates underlying economic issues and highlights the dearth of consumption.
Nevertheless, the WGC is anticipating the gold demand to shoot up this year in India. The acceleration of broader economic growth and policy measures will lead to the stability in gold prices and builds confidence among the households to purchase gold. The WGC is expecting Indian gold demand to be in the range of 700 to 800 ton this year.
The global uncertainties can act as a booster for the gold prices. Now that there is a viral outbreak (coronavirus) in China, there can be an increase in gold consumption. The gold price ended the year 2019 a little over Rs 39,000 per ten grams, which is about 24% more than what it was at the end of the year 2018.
The demand for gold in the form of jewellery dropped 17% year-on-year basis in December 2019, and it was around 149 ton. Whereas, the demand for gold in the form of coins and bars plummeted 20%. Nevertheless, the elevated prices of gold meant that overall demand for gold in the quarter ended in December 2019 was only 2% in terms of value.
The jewellery demand fell 9% year-on-year basis to touch 544.6 ton in the year 2019, while the demand for coins and bars dropped to 145.8 ton, which is 10% down. India’s gold import was 646.8 ton, which is a drop of 14% from the year 2018. Inflow through the grey market is estimated to be around 120 ton last year.
For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in.
Engineer by qualification, financial writer by choice. I am always open to learning new things.
