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India’s Gold Demand Dropped 9% In 2019: World Gold Council

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India’s Gold Demand Dropped 9% In 2019: World Gold Council
Aparajita Gupta - 30 January 2020

New Delhi, January 30: India’s gold demand for the full-year 2019 is 690.4 tonnes compared to 760.4 tonnes in 2018, down 9 per cent, World Gold Council data showed on Thursday.

Even the total jewellery demand in India for 2019 was down by 9 per cent at 544.6 tonnes as compared to 598 tonnes in 2018. However, the value of jewellery demand in 2019 was Rs 17,179 crore, up by 3 per cent from 2018 (Rs 166,610 crore).

“India’s gold demand was 9 per cent lower in 2019, at 690 tonnes, primarily an outcome of a sharp surge in prices of over 20 per cent in H2. However, in value terms, this reflects a growth of 3 per cent over last year. Growth in H1 was followed by a sharp drop in Q3. Diwali and Dhanteras revived hopes but the volatility coupled with a higher price bar impacted demand, in the lower and middle price bands,” said Somasundaram PR, Managing Director, India, World Gold Council.

The data showed total investment demand for 2019 was down by 10 per cent at 145.8 tonnes in comparison to 162.4 tonnes in 2018.

“Investment demand received some respite during Dhanteras and the ensuing wedding season with 45.3 tonnes – the strongest quarter in the year, as gold clearly proved to be the best performing asset class in 2019. With high prices, expectedly, recycled gold increased by 37 per cent to a record 119 tonnes. RBI buying was also a positive feature in 2019, lifting its gold reserves by 32.7 tonnes (till November) in 2019,” said Somasundaram.

Total gold recycled in India in 2019 was 119.5 tonnes as compared to 87 tonnes in 2018.

Demand for gold in India for Q4 2019 was at 194.3 tonnes down by 18 per cent as compared to overall Q4 demand for 2018 (236.5 tonnes).

“Looking ahead, 2020 we expect policy-led and industry-led initiatives to bring a marked shift in making the industry more transparent and organised. Already government has made hallmarking mandatory on January 15, 2020 with a transition period of one year for the trade to sell or change its existing non hallmarked inventory. This is an overdue reform and a positive step towards making the Indian gold more trustworthy. These and other changes to follow are significantly positive for the long-term sustainability of demand, especially for the compliant and the organised,” said Somasundaram.

“Short term challenges remain, however, as large sections of the industry compete on low margins and fear tax uncertainty, leaving little incentive for long term investments and modern trade practices. India’s average long-term gold demand is likely around 850 tonnes given its affinity to gold and economic and social context. As policy measures unfold, broader economic growth accelerates and local prices of the past 6 months become more acceptable among households, India’s gold demand will be in the range of 700-800 tonnes in 2020,” he added.

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