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Demand for gold sees a sharp rise in the first quarter of 2019

PB Jayakumar     May 2, 2019

Boosted by fall in prices, strengthening of the rupee and festive season, demand for gold in India went up by 5 per cent in the first quarter of 2019 at 159 tonnes, as compared to 151.5 tonnes during the corresponding quarter in 2018. In value terms, Q1 2019 gold demand was worth Rs 47,010 crore, a rise of 13 per cent in comparison with Q1 2018 figures of Rs 41,680 crore.

Total jewellery demand in India for the period was also up by 5 per cent at 125.4 tonnes, as compared to Q1 2018 quantity of 119.2 tonnes. In value terms, jewellery demand was at Rs 37,070 crores, a rise of 13 per cent over Rs 32,790 crore during the first quarter of the previous year.

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Total gold recycled in India during the period also went up sharply by 14 per cent to 16.1 tonnes, as compared to 14.1 tonnes in Q1 2018.

"The strengthening of the rupee and the fall in local gold prices towards the later part of the quarter triggered a rise in India's gold demand. Growth of 5 per cent in Indian jewellery demand to 125.4 tonnes uplifted global demand and boosted retail sentiment," said Somasundaram PR, Managing Director, India, World Gold Council, which tracks trends in wholesale gold prices globally.

He said the increase in auspicious wedding days in the first quarter of this year - three times as many as those in the first quarter of last year - was also crucial to the rise in gold demand. The stronger rupee also benefited investors, with demand for gold bars and coins rising by 4 per cent to 33.6 tonnes in the first quarter.

The World Gold Council estimates that demand is likely to remain high in the second quarter due to traditional wedding season buying, the Akshaya Tritiya festival and rising crop prices. Further, IMD has forecast that the monsoon will be normal this year which augurs well for the rural economy and gold.

"We estimate India's gold demand to be positively impacted and be in the range of 750 to 850 tonnes in 2019," said Somasundaram.

Global gold demand grew to 1,053.3 tonnes in the first quarter, up 7 per cent in comparison to the same period last year. This year-on-year increase was largely due to buying by central banks as well as growth in gold-backed exchange-traded funds (ETFs). Central banks bought 145.5 tonnes of gold in Q1, up 68 per cent on the same period in 2018 and representing the strongest start to a year since 2013.

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