January-March gold business shines on strong rupee, lower prices

CHENNAI: A strengthening rupee along with a drop in

gold

prices boosted demand for the precious metal in the January-March quarter — traditionally a weak period — by 5% year-on-year to 159 tonnes, according to data from the World Gold Council. The council has also given a 2019 guidance for demand growth to 800-850 tonnes — 5-10% higher — indicating better fortunes for the trade.


“The strengthening of the rupee and the fall in local gold prices towards the later part of the quarter triggered a rise in India’s gold demand by 5%. The increase in auspicious wedding days — three times as many as those in the January-March quarter in 2018 — was also crucial to the rise in demand. The stronger rupee benefited investors too, with demand for gold bars and coins rising by 4% to 33.6T in the first quarter,” said WGC India MD, P R Somasundaram.

The demand is almost equal to that of the same period in 2017, which stood at 161 tonnes.

Jewellery demand also increased 5% in terms of volume and 13% by value. Jewellers add that even as demand went up, ticket sizes came down by 20% on an average. “The purchase last quarter was mostly wedding-related and since a part of last quarter had election campaigns, ticket sizes took a hit because of strict rules,” said Khandelwal Jewellers MD Nitin Khandelwal. He added that, while the average ticket size during wedding season is Rs 5 lakh, this went till Rs 3 lakh.

The latest January-March quarter saw a 6% drop in prices, yet didn’t translate into an even greater demand as anticipated by jewellers as general elections spooked gold buying partially. “However, if current trends continue, we can look forward to a better April-June quarter, beginning with Akshaya Tritiya (considered an auspicious day to buy gold — this year it is on May 7). Sentiments are healthy among buyers,” said NAC Jewellers MD N Anantha Padmanaban.

Industry analysts, too, add that with demand looking up, the upcoming quarters are expected to show a healthy trend. “After demonetisation, imposition of excise duty and fluctuating global markets, the total demand for the year stood at around 760 tonnes. This year, we expect the demand to come back to the pre-demonetisation levels. We estimate India’s gold demand to be positively impacted in 2019 and be in the range of 750-850 tonnes,” added Somasundaram.