Domestic gold demand slides 1.4% to 760.4 tonne in 2018, grows 4% globally
Central banks in different parts of the world bought 74% more gold, adding 651.5 tonne to their official gold reserves in 2018 compared to 374.8 tonne in 2017
Mumbai: Higher prices and some government measures among other negatives pulled down domestic gold demand by a marginal 1.40 per cent to 760.4 tonne in 2018, while global consumption inched up 4 per cent, according to the annual report from the World Gold Council. The council attributed the marginal decline in domestic demand to fewer auspicious wedding days, higher price volatility and various transparency measures implemented by the government.
In 2017, the country consumed 771.2 tonne gold, which declined to 760.4 tonne in 2018, the WGC said in its annual report Thursday. On the other hand, the council said global demand rose 4 per cent to 4,345.1 tonne in 2018 mainly driven by the central banks in the second half of the year. In 2017, global consumption had stood at 4,159.9 tonne.
Various central banks bought 74 per cent more gold, adding 651.5 tonne more to their official gold reserves in 2018, compared to 374.8 tonne in 2017, the report said.
Given the forthcoming elections and a likely increase in spending, the council expects the demand to be in the range of 750-850 tonne in the country in 2019, WGC India managing director Somasundaram PR told PTI.
Domestic jewellery demand was down by 1 per cent to 598 tonne from 601.9 tonne in 2017. In value terms, jewellery demand rose 5 per cent to Rs 16.66 lakh crore from Rs 15.84 lakh crore in 2017, he said.
Total investment demand was down by 4 per cent at 162.4 tonne compared to 169.3 tonne in 2017. In value terms, this rose 2 per cent to Rs 45,250 crore from Rs 44,560 crore, he added.
"With increase in income one would expect the demand to grow. However, the various transparency measures, including GST, impacted the demand. However, these measures are helping the industry to gradually convert to organised sector," Somasundaram said.
The increase in organised sector gems and jewellery sales has resulted in a decline of the grey market to 90-95 tonne in 2018 from 115 tonne in 2017, he added.
The gold prices excluding taxes were Rs 28,474 per 10 grams during the fourth quarter of 2018 compared to Rs 26,566 in 2017, he said.
Investment demand received its usual seasonal boost during Diwali with 56.4 tonne, the strongest quarter in the year, but still it was 5 per cent down in quarter four of 2017.
The council said globally, net gold purchases jumped to their highest level since the end of US dollar convertibility into gold in 1971, as a greater pool of central banks turned to gold as a diversifier. There was accelerated investment in bars and coins during the second half which grew 4 per cent to 1,090.2 tonne.