Demand for gold in the September quarter fell 32 per cent to 148 tonnes against 219 tonnes recorded in the corresponding period last year, showed World Gold Council data released on Thursday.
The drop in demand was largely due to the measures taken by the Government to suppress consumption. Besides, the rupee depreciation against the dollar pushed up gold prices in rupee terms even as they fell in the global markets.
Jewellery demand dipped 23 per cent to 105 tonnes (136 tonnes) due to the import restrictions imposed by the Government. The 80:20 rule now in place stipulates that jewellers should re-export 20 per cent of the gold imported before making fresh purchases.
The confusion over the complex new regulation hampered the market, with jewellers curbing their purchases for fear of breaching the norm.
Investments in gold, including gold bars and coins, dipped to 43 tonnes (83 tonnes) with investors preferring to book profit as prices increased.
Gold prices in the September quarter increased 4 per cent to Rs 26,503 per 10 gram against Rs 25,381 in the June quarter. The yellow metal’s prices were at Rs 29,302 per 10 gram in the September quarter last year.
Recycling of gold in the third quarter nearly doubled to 61 tonnes (34 tonnes) aided by firm prices. Imports fell sharply to 85 tonnes against 223 tonnes recorded in the September quarter last year. It hit a record high at 338 tonnes in the June quarter, following which the Government imposed various import restrictions and marked up customs duty substantially.
Despite the Government measures, gold demand in the first nine months of this year was up 19 per cent at 716 tonnes, aided by jewellers marking up purchases 13 per cent to 452 tonnes and investments in gold rising 30 per cent to 264 tonnes.
China has already pipped India as the largest gold consumer, registering a growth of 40 per cent at 798 tonnes in the first nine months this year.
Somasundaram P. R., Managing Director, World Gold Council, said the curbs imposed by the Government seem to have worked in the short term, but the data for the nine-month period reflect people’s trust in gold.
“Having achieved the desired impact, we hope the Government would re-look its policy measures as the livelihood of over two lakh people employed in the industry is at stake,” he said.
The Council expects the demand for gold in India to touch 900-1,000 tonnes this year with a strong bias to the lower end. Last year, the country bought 865 tonnes of gold.
Global gold demand was down 21 per cent to 868.5 tonnes in the third quarter due to contraction in India and large outflow from exchange-traded funds.
suresh.i@thehindu.co.in