India Gold demand 2018 to be about 800tons

Jewellery demand in India for Q3 grew by 10%

Market eye on festivals

and wedding season

Somasundaram PR, Managing Director, India, World Gold Council presented India Demand Statistics for Q3 2018 for the period of July to September. Notable key highlights says, demand for gold in India for Q3 2018 was at 183.2 tonnes up by 10% as compared to overall Q3 demand for 2017 was of 165.8 tonnes. While India’s Q3 2018 gold demand in value term remained of Rs 50,090 crores that is about 14% up over the Q3 2017 that worth Rs 43,800 crores.

Total Jewellery demand in India for Q3 2018 was up by 10% at 148.8 tonnes as compared to Q3 2017 of 134.8 tonnes. The value of Jewellery demand was Rs 40,690 crores, up by 14% from Q3 2017 which was of Rs. 35,610 crore.

Total Investment demand for Q3 2018 was up by 11% at 34.4 tonnes over Q3 2017 of 31 tonnes & in value terms, Investment demand was Rs. 9,400 crores, up by 15% from Q3 2017 of Rs. 8,200 crores. Total gold recycled in India in Q3 2018 was 23 tonnes, as compared to 26.7 tonnes in Q3 2017.

According to Somasundaram PR, “India’s gold demand was up 10% at 183.2 tonnes in Q3 2018 compared to Q3 2017. A dip in the gold price in the early part of the quarter – its lowest level since January 2018 - spurred demand. However, the rupee’s depreciation impacted the local price and demand eased towards the later half of the quarter.

A combination of factors such as lack of buying occasions, disruption caused due to floods in a key gold market and an intervening inauspicious period affected demand. Equity market volatility created conditions to diversify into gold though inflation, the traditional driver of gold demand, remained under control despite higher oil prices, offsetting this trend.

Overall, Q3 2018 saw demand across both jewellery and bars and coins, up by 10% and 11% respectively. Notwithstanding the positive sentiment underpinning this growth, it should be seen in the context of a low base following the introduction of GST in Q3 2017.

Looking ahead, the last quarter is normally a vibrant period for gold related purchases with festivals and wedding season. However, the seasonal spike in demand could be moderate this Dhanteras - Diwali due to factors like a lack of liquidity, rising Indian prices and impending elections in some key states impacting trade logistics. We estimate full year Indian gold demand to be at the lower end of 700-800 tonnes range.