India's gold demand down 6% in Q2: What's the reason?
What's the story
India's gold demand fell by 6% to 131 tons in the June quarter (Q2), according to a report by the World Gold Council. The decline was mainly due to volatile prices, which led consumers to postpone their jewelry purchases. However, despite the drop in tonnage, the value of gold demand saw a significant increase of 50%, reaching ₹1.98 lakh crore as compared to ₹1.32 lakh crore during the same period last year.
Market shifts
Jewelry demand plummeted by 15%
The report highlights a stark contrast in the demand for jewelry and bars.
While jewelry demand plummeted by 15% to 75 tons (from 89 tons), its value surged by 34% to ₹1.13 lakh crore (from ₹84,200 crore).
On the other hand, the demand for bars and coins rose by 9% to 50 ton (from 46 ton) with their value reaching ₹75,700 crore (up from ₹43,700 crore).
Investment trends
ETFs saw a whopping 62% year-on-year increase
Exchange-traded funds (ETFs) witnessed a whopping 62% year-on-year increase in the June quarter, rising to four ton from two ton.
However, this was an 82% drop compared to the March quarter when it stood at 20 ton.
Sachin Jain, Regional CEO-India at World Gold Council, attributed these trends to consumers buying gold according to their budgets amid falling prices and the Prime Minister's call for reduced gold purchases.
Demand decline
Jewelry demand hits 2nd-lowest level since 2000
Despite the strong sales during Akshaya Tritiya, jewelry demand in Q2 hit its second-lowest level since 2000.
The decline was attributed to a month-long inauspicious period (mid-May to mid-June) and a 9% import duty hike.
This has led to an increase in inventory levels at jewelers' end, which touched a high of 21 tons in Q2, well above the 13-year average of 15 tons.