The World Gold Council expects India's gold demand to remain flat this year at about 700 tonnes and marginally lower than 771 tonnes logged in the previous year on the back of high prices denting consumer sentiments.

Total demand in the first three quarters of this year was down one per cent at 524 tonnes (529 tonnes).

However, demand in the September quarter was up 10 per cent at 189 tonnes due to sudden dip in prices during the start of the quarter and lower base effect with the launch of GST last year. Jewellery demand was also up by 10 per cent at 149 tonnes.

In value terms, gold demand was up 14 per cent at Rs 50,090 crore, while jewellery demand increased by similar percentage points to Rs 40,690 crore.

Somasundaram PR, Managing Director, World Gold Council, said the seasonal spike in demand during the Dhanteras and Diwali could be moderate due to higher prices, lack of liquidity and impeding elections in key states impacting trade logistics.

Overall full-year gold demand is likely to be at the lower end of 700-800 tonnes range, he added.

A dip in gold prices to its lowest level since January during the early part of the quarter spurred demand. However, rupee depreciation impacted prices and demand eased towards the later half of the quarter, he said.

Gold prices were up 4 per cent at Rs 27,345 per 10 grams, while in dollar terms it was down five per cent at $1213 an ounce (about 28 grams).

Gold imports increased 60 per cent to 237 tonnes as some of the jewellers took advantage of lower tariff value fixed by the government in the fortnight post a sharp fall in prices in July. Tariff value, which is the average of last 15 days price movement, is reset for calculating import duty.

Despite being the peak festive season, Somasundaram said gold is being sold at a discount of $5.5 per ounce (Rs 100 per 10 grams) in the wholesale market.

In a bid to de-dollarise reserves, RBI had ramped up its gold reserves by 13.7 tonnes to 580 tonnes in the September quarter. It had bought 21.8 tonnes of gold in the first three quarters of this year. In fact, central banks gold purchases hit a three-year high of 148 tonnes in the quarter under review.

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