Gold demand plunges 29% in Q1

timesofindia.indiatimes.com / May 18, 2012
NEW DELHI: High gold prices coupled with the three-week strike by jewellers has resulted in a sharp fall in purchase of the yellow metal during the first quarter, with sales falling nearly 29% to a little over 200 tonnes during January-March, 2012.
While housewives are deferring purchase of jewellery, even the savvy investors, who prefer to have the metal in their investment portfolio, seem to have given up, thanks to high prices. As a result, jewellery sales were down 19% during the quarter, while the demand for coins and bars was down by nearly half to 55 tonnes, data released by the World Gold Council (WGC) showed.
“Weakness and volatility in the rupee resulted in elevated local prices, while consumers struggled to digest a rise in import taxes on gold and the introduction of an excise duty on gold jewellery, which prompted jewellers country-wide to strike,” the agency said in a report, adding that the demand in terms of value for jewellery increased by 10% in the quarter to a record high of Rs 41,480 crore.
Although WGC seemed to suggest the strike for the fall in sales, where large retailers such as Gitanjali and Tanishq stayed away, jewellers said shops now wear a deserted look as buyers are waiting for prices to fall.
In India, gold prices are off their peak of near Rs 30,000 per 10 grams seen in early May, but they are still around 28% higher than a year ago. In Delhi, the yellow metal fell by Rs 100 to a five-week low of Rs 28,440 per 10 grams, while it lost around Rs 165 to close at Rs 27,940. A bulk of the price rise in the domestic market is on account of a weaker rupee, which has lost nearly 21% against dollar over the past 12 months and closed at 54.49 on Thursday. During this period, gold gained nearly 6% and was trading at $1,575 an ounce internationally, according to data available with Bloomberg. WGC said global demand for gold was down 5% in the first quarter, essentially due to higher prices.
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