India's gold demand dropped 12% in January-March quarter

Gold demand at weakest in first quarter since 2008 financial crisis

Gold demand at weakest in first quarter since 2008 financial crisis

India's Q1 2018 gold demand value was Rs 31,800 crore, a fall of 8 per cent in comparison with Q1 2017 (Rs 34,440 crore).

On the other hand, gold exchange-traded funds (ETFs) posted their fifth consecutive quarter of inflows, though they were down on past year, showing investment in the first quarter was mixed. "The decline can be attributed to a number of factors, including higher local gold prices, a substantial drop in the number of auspicious wedding days this year compared with the previous year and an anticipation of an import duty cut in the budget", said Somasundaram PR, managing director (India) of the World Gold Council. The total supply of gold increased by 3% to 1063.5t, primarily due to a modest increase in producer hedging.

"A buoyant economy coupled with a lacklustre gold price saw U.S. Mint Eagle sales fall 59% [year on year] in Q1 2018", the report said.

Global demand for bar and coin investment gold fell 15% thanks to weaker demand from Chinese, German and United States buyers.

Global jewellery demand was roughly flat at 488 tonnes, down 1% from a year ago, figures released by the World Gold Council (WGC) showed on Thursday.

In the market for bars and coins, demand from China - the world's largest bar and coin market - fell 26% year over year to 26 tonnes. In China, consumers bought more gold jewellery during the new year celebrations and the improving USA economy led to more Americans splashing out on jewellery.

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Despite the fact that the gold price was relatively stable compared with year-earlier levels, there was a perception of greater volatility among consumers.

Exchange Traded Funds had their fifth consecutive quarter of inflows, holdings grew by 32 mt, due exclusively to growth in North America.

Presenting the data at a press conference in Mumbai, Somasundaram P.R., Managing Director, India for the World Gold Council said rising local gold prices led to the second weakest quarter for jewellery demand in nearly ten years.

The report said that central banks added 116.5 tonne to global official reserves in Q1 2018, compared to 82.2 tonne, which was 42 per cent higher than the previous.

In the technology sector, demand for the yellow metal rose 4% year-on-year to 82t, with the wireless sector a key growth area with increasing use of three-dimensional sensors for facial recognition on smartphones, gaming consoles and security systems.

Mine production for the quarter was 770t, 1% higher on the year, while recycling levels were steady at 288t. Russian Federation was the biggest official sector buyer, responsible for just over a third of central bank demand.

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