The demand for jewellery declined by 26 per cent to 125.3 tonnes in the third quarter of calendar year 2011 as compared to the same period last year mainly due to retailers selling their stocks following volatility in gold prices, World Gold Council (WGC) on Thursday said.
“The third quarter of 2011 has seen some difficult times for gold, not just in India but around the world. The decline in jewellery demand is mainly due to retailers reducing their inventory following price volatility,” WGC Managing Director (Middle East and India) Ajay Mitra said. He was talking to reporters here after releasing a report, ‘Gold demand trends third quarter 2011'.
In value terms, however, demand was marginally higher by 2 per cent at Rs.31,450.30 crore for the quarter under review against Rs.30,858.88 crore in the same period last year.
“The drop in demand was mainly in urban areas, while in semi-urban and rural areas it was good. As 60 per cent of the total business is rural driven, it was good,” he said.
Investment demand, comprising bars, coins and ETFs (exchange traded funds), during July-September also dropped by 18 per cent to 78 tonnes from 95.5 tonnes in the same quarter in calendar year 2010.
But in value terms investments in the third quarter went up by 12 per cent to Rs.19,578 crore from Rs.17,495 crore in the same quarter last year, according to the report.
Going ahead, Mr. Mitra said, “We expect positive sentiments as the wedding season, in which major jewellery buying takes place, falls in the fourth quarter of calendar year 11.” Imports also dipped by 20 per cent to 200 tonnes from 250 tonnes in the same quarter last year.
“If the volatility remains moderate at about 15-20 per cent, gold imports may cross 960 tonnes. However, if the volatility continued at 30-33 per cent, reaching 900-tonne mark will become a big achievement,” Mr. Mitra said.
Total gold imports till October this year stood at 753 tonnes. In 2010, these were 958 tonnes.
The recycled jewellery trade declined by 32 per cent to 15 tonnes from 22 tonnes in the third quarter of 2010, Mr. Mitra said. “However, from the second quarter there is a marginal rise in scrap jewellery. In the second quarter of 2011, scrap jewellery in India stood at 10 tonnes,” he said.
Global gold demand in the third quarter was up 6 per cent at 1053.9 tonnes (year-on-year), the report said. “Growth in investment demand more than offset a decline in gold jewellery demand.”
While global gold jewellery market contracted by 10 per cent in the third quarter of 2011, at 465.6 tonnes, demand was only 5 per cent below quarterly average since the fourth quarter of 2008 of 490 tonnes. “Moreover, jewellery demand in value terms was 24 per cent higher year-on-year at a record $25.5 billion,” it said.