New Delhi: The World Gold Council (WGC) said on Thursday that India’s gold demand fell nine per cent to 690.4 tons in 2019 from the previous calendar year as record domestic prices and economic slowdown dented retail purchase.
However, in 2020, gold demand in India — the world’s second biggest consumer after China — could increase to 700-800 tonnes on hopes of increased acceptance of high price level and likely economic reforms boosting consumer confidence.
The domestic gold price finished 2019 just above Rs 39,000 per ten grams, almost 24 per cent higher than at the end of 2018, WGC said in its latest report.
In 2019, the WGC said India’s gold demand in volume terms declined to 690.4 tons from 760.4 tons in 2018, out of which jewelry demand fell nine per cent to 544.6 tons from 598 tons, while bar and coins demand also dropped 10 per cent to 145.8 tons from 162.4 tons in the said period.
However in value terms, the country’s gold demand rose three per cent to Rs 2,17,770 crore in 2019 from Rs 2,11,860 crore in the previous year.
“Dhanteras – the first day of Diwali (the Festival of Light) which fell on October 25, 2019 – failed to bring cheer to gold demand in Q4 as the higher domestic gold price and weak economic sentiment curtailed gold sales,” the WGC said.
Festival demand received some support from advance wedding purchases and a dip in the gold price ahead of the November wedding season released some pent-up wedding-related demand, but volumes were nevertheless soft compared with 2018, it said, and added, the slowdown was less pronounced among the more organised national and regional chain stores India’s gold import including through grey channels, the WGC said it declined by 14 per cent to 646.8 tonnes in 2019 from 755.7 tonnes in 2018. Imports through grey market stood at 115-120 tonnes in 2019.
“We do believe imports may not rise as fast as demand this year. But do expect custom duty on gold to be reduced to 10 per cent from 12.5 per cent at present.” Two-thirds of India’s gold demand comes from rural areas, where jewellery is a traditional store of wealth.