Surging local gold prices and fewer weddings led to a sharp drop in gold and jewellery demand in the first quarter of 2018. Demand for gold was 115.6 tonnes (valued Rs 31,800 crore), down 12 percent as compared to the Q1 2017 demand of 131.2 tonnes (valued Rs 34,440 crore). In value terms, the fall is 8 per cent.
The value of jewellery demand in Q1 2018 was Rs 24,130 crore, a drop of 7 per cent from Rs 26,050 crore in the previous year. Total investment demand for gold in the quarter was also down by 13 per cent at 27.9 tonnes in comparison with 32 tonnes in the corresponding previous year quarter. In value terms, gold investment demand was Rs 7,660 crore, a fall of 9 per cent.
Presenting the data at a press conference in Mumbai, Somasundaram P.R., Managing Director, India for the World Gold Council said rising local gold prices led to the second weakest quarter for jewellery demand in almost ten years.
"A substantial drop in the number of auspicious wedding days during the period compared with Q1 2017, could be a factor for muted demand as consumers made less wedding-related purchases", he said.
Imports were also down 50 per cent year-on-year, in anticipation of an import duty cut in the Union Budget that did not materialise, he said.
Local gold prices have risen from less than Rs 80,000 per ounce a year ago to over Rs 87,100 per ounce as of early this week. Globally, the gold demand of 973.5 tonnes was the lowest Q1 total since 2008 as investment in gold bars, coins and gold-backed ETFs was 27 per cent weaker year-on-year.
The council predicted positive momentum in the coming quarters and forecast a demand of 700 to 800 tonnes during the year.
An impending gold policy to make gold an asset class will boost the industry momentum to get more organised and transparent and build a strong case for a central gold body under the gold policy. Other factors like policy focus on doubling farm income and ease of business under GST augur well for the gold industry in 2018 and the medium term. New ways of buying gold through digital platforms are catching up quickly, he said.