India’s Market Expects Gold Demand Total Of 800T By End Of Q4 2018
Gold demand in India dropped down to 8% (187.2 tonnes) as compared to the overall demand for 2017 (202.6 tonnes). The demand for gold in Q2 2018 was valued at Rs 52,692 crores, the same as that of the year 2017. Total demand for jewellery too dropped by 8% in the same quarter and its values in digits fell by 1%. With a difference in the demand percentile, the country’s market expectations of gold demand will see a total of 700-800 tonnes by the end of Q4 2018.
The decrease in demand for gold has been affected worldwide as exchange-traded funds drive 4% decline in gold demand. ETF inflows continued, albeit at a much slower pace compared to the high levels seen in 2016 and 2017. North American listed funds fell by 30.6t as investors focused on domestic economic growth. European listed funds, however, saw decent inflows. According to the WGC, this could be uncertainty stemming from Italian elections and monetary policy outlook. China, the world’s largest gold market saw a 7% rise in consumer demand.
Alistair Hewitt, Head of Market Intelligence, World Gold Council said, “It is interesting how investors around the world have reacted to some of the risks stalking financial markets. Weaker economic prospects and tumbling currencies off the back heightened tensions with the US boosted Chinese and Iranian gold demand, while US investors shrugged off any geopolitical concerns. Demand from tech companies continued to grow, with H1 demand reaching a three-year high, while economic growth boosted jewellery demand in the US with Q2 demand hitting a ten year high.”
With the decrease in gold demand, investment was valued at Rs 11,061 crores up by 2% since Q2 17. Gold recycling has increased as well in the country since the demands have gone down. Q2 18 witnessed 32 tonnes of gold recycled which is 8% higher compared to Q2 17.
Somasundaram PR, MD (India), World Gold Council during the launch of the report provided some statistics and explanations for the changes in the demand trends of the Indian market.
“India’s gold demand in Q2 18 was 187.2 tonnes, 8% lower than the strong Q2 17, when consumers rushed to make advance purchases ahead of the GST roll out. A strong Akshay Tritiya and wedding season boosted demand at the start of the quarter but the onset of Adhik Maas, which is considered inauspicious and a rising Indian rupee price in spite of softening international prices kept the quarter range bound. While demand for the first half of the year is also below the same period of 2017 and the 10-year average by 6% and 13% respectively, there are strong positives evident in the growth of organized trade and digital products. The short-term disruption caused by the various transparency measures since 2016 have started to wane with industry transitioning well across the spectrum. For the second half, good monsoons and the festive season, aided by government’s effort to boost farm incomes, bodes well for demand. Our full year estimate for gold demand is in the range of 700 to 800 tonnes.”
The total supply of goods increased by 3% in Q2 18 to 1,120t supported by increased mine production and recycling growth. Mine production in Q2 saw a rise of 3% to 836t, the highest Q2 record as projects in Russia, Indonesia and Canada continued to ramp-up. India despite facing a fall in the demand is expected to reach 800t by the end of Q4 2018.
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