Jewellers strike impacted y-o-y gold demand by 39%

Chennai: A month-long jewellers strike in the January-March quarter impacted gold demand by 39% year- on- year. At 88.4 tonnes, the gold demand saw a 62 tonne drop, which accounted for half of the over all 115 tonne decline in global jewellery demand. Quarterly demand of 88.4 tonnes was the lowest since Q1 2009. While jewellery demand slumped by 41%, investment demand of gold slumped by 31% for the quarter.

“While the month-long strike was the main reason for the drastic change in demand, a sharp price increase in mid-January — the local gold price breached the key 26,000/10g level, reaching 28,000/10g by 10 February before surging higher still, getting close to 30,000/10g by the end of the quarter — made consumers defer purchases ,” said P R Somasundaram, MD WGC India. The anticipation of a price correction and reduction in customs duty on gold kept jewellery demand tepid in February, following which, the month-long protest against the excise duty further strained demand. However, this has caused a pent-up demand in the second quarter, fuelled by wedding season purchases. Those who had deferred their purchased in March are purchasing now, given that they were unable to buy during the strike. “The prices are still high and it looks like they will rise further. I am unable to predict the full-year demand, but I feel if we take a 12-month average, the demand will be the same as last year,” said Princeson Jose, MD, Prince Jewellery.

The WGC predicted the full-year gold demand expectations for India in the range of 850 tonnes to 950 tonnes, with the 2015 demand at 849 tonnes

“I think this year will mirror last year, with a subdued demand in the first half and an increased demand in the second half, owing to projected improved rural income and a good monsoon ahead, Somasundaram added.

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