Late revival of monsoons, re-stocking by traders help

Domestic gold demand recovered 9 per cent to 223.1 tonnes in the July-September quarter driven by a late revival of the monsoons and re-stocking by traders ahead of the festive and wedding seasons, according to the World Gold Council (WGC).

The demand stood at 204.8 tonnes in the third quarter of 2011, the WGC said in its ‘Gold demand trends report: Q3’ released here on Thursday.

However, in value terms, the demand grew three times more by a full 27 per cent to Rs.65,373 crore, compared to the third quarter of 2011.

The late revival of the monsoons and re-stocking by traders and jewellers ahead of the festive and wedding seasons could be the key reasons for the upward trend in demand in the third quarter, the report pointed out.

“After a slow start to the first-half, third quarter witnessed a gradual pick-up in gold demand ahead of the festive and wedding seasons that falls in the fourth quarter. Against the backdrop of a slowing economy and persistently high inflation, this upward trend is encouraged by the country’s socio-cultural affinity and the significance of gold as an effective store of wealth is likely to continue through the end of 2012,” WGC Managing Director for investment Marcus Grubb told PTI here. Moreover, consumers here also seemed to have adjusted to the rise in gold price levels were likely to be positive for demand in the country, he added.

During the reporting quarter, jewellery demand saw an increase of 7 per cent year-on-year to 136.1 tonnes from 126.8 tonnes in the corresponding quarter last year.

In value terms, jewellery demand rose by 25 per cent to Rs.39,880.2 crore from the third quarter of 2011. Investment demand in tonnage was up 12 per cent at 87 tonnes against 78 tonnes in the same quarter last year.

Gold ETFs have seen a record influx of Rs.500 crore in the last quarter, which is 80 times more since the launch in April 2007, WGC quoted the Association of Mutual Funds in India. It added that the country’s top two exchanges NSE and BSE recorded a total turnover of over Rs.2,200 crore in gold exchange-traded funds (ETFs) on Dhanteras on November 11, an auspicious occasion for gold buying as per Hindu tradition.

Imports also grew by 9 per cent to 223 tonnes from 205 tonnes in the same quarter last year. Till date, the country’s total imports till September stood at 604 tonnes, while the total imports in 2011 were 969 tonnes.

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