Unseasonal rains and hailstorms in several parts of the country have damaged the winter crop, impacting rural demand and effectively putting less disposable income in farmers’ hands and hampering their gold-buying capacity.
Indian demand for gold in 2014 was down 14 per cent over 2013 at 843 tonnes. “Rural demand for gold in India accounts for 60-70 per cent of demand and this will certainly be impacted by the unseasonal rains,” said Keyur Shah, CEO, Muthoot Exim, the precious metals division of the Muthoot Pappachan Group.
He said: “There could be a 10-15 per cent impact on seasonal demand but this is in the backdrop of stable gold prices so there is no real pent-up demand.”
World Gold Council (WGC) had earlier estimated that Indian gold demand would pick up in 2015 and reach 900-1,000 tonnes.
Somasundaram P. R., Managing Director-India, WGC, said “The erratic weather could have an immediate bearing,” and “there will certainly be an impact of the weather and it could be manifest in the Akshaya Tritiya (which falls on April 21) itself. But the demand for gold in urban areas is still good with the drop in interest rates meaning lower cost of holding gold. One cannot say if the urban demand will compensate for the likely drop in rural demand.”
There is a view that this being the ‘seasonal demand’ for gold, consumers would buy gold anyway. “Consumers will buy gold irrespective of the conditions during festive or auspicious occasions,” Suresh Jain, Treasurer, India Bullion and Jewellers Association (IBJA), said. He said that post the auspicious period, the rural consumer could in fact turn seller. “From mid-May onwards, farmers could in fact choose to sell their gold given the steady price of gold and their requirements.”
The WGC India chief felt the development may not impact long term demand. “For the full year, I do not think this development will dent gold demand significantly. India has grown resilient to such natural anomalies and I think our earlier estimate of 900-1,000 tonnes demand for calendar 2015 holds.”
Rural demand for gold accounts for 60-70 per cent of total demand.
World Gold Council estimated India’s gold demand in 2015 to be 900-1,000 tonnes.
Annual demand unlikely to be dented, says WGC
Indian demand for gold in 2014 was down 14 per cent over 2013 at 843 tonne.
