Gold demand in the June quarter showed a mixed trend despite high prices, with large jewellers registering volume growth and smaller ones doing ‘reasonably well', according to a preliminary report by the World Gold Council, a global body representing gold miners.
Consumers took advantage of a softer price in May – which eased from the highs recorded in late April – pushing jewellery sales up, the Council, which is expected to release its final report by mid-August, said in a press release.
“Although early summer is traditionally a weak season, the outlook for gold remains positive as demand is expected to increase due to the onset of the annual festive period starting in August and lasting through October,” it said.
Gold prices ruled above the Rs 2,000-a gm-level through the June quarter, at an average of Rs 2,167 a gm. The price increase was 16 per cent more than the corresponding quarter last year and five per cent higher compared sequentially.
In the June quarter, the global jewellery sector's demand for gold increased by four per cent to 2,052 tonnes. In value terms it was up 31 per cent, to $85 billion. Investment demand rose 51 per cent to 1,552 tonnes and was up 89 per cent at $63 billion compared with the June quarter last year, the WGC said.
In the international market, the yellow metal registered its tenth consecutive quarterly gain. Prices rose 4.6 per cent to $1,505.50 an ounce on the London PM fix (a widely followed benchmark for global gold prices), largely due to global economic uncertainty and increased volatility across most asset classes.
Even as prices of most commodities dropped sharply in May, gold remained more or less stable. The threat of a debt default by Greece and other European nations, weak economic outlook in the US and falling equity prices in May and June also contributed to this, said the WGC.
Concerns over the rising rate of inflation globally too favoured gold as an investment worthy asset class. Not only has inflation in China and India remained high, but price pressures have also been transferred to the US and other Western markets, which have seen upward price pressure on goods and services over the past few months, the WGC said. At the same time, long-term inflation and expectations continue to rise, it added.
Economic growth, especially in the US and parts of Europe, has been weaker than expected and labour markets are in the doldrums. Consequently, increased uncertainty over whether markets will experience inflation, stagflation or even deflation over the next few years has made it difficult for investors to position their portfolios appropriately.