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Gold demand increases by 66% in India
Gold demand increases by 66% in India
The demand for gold in India has reached an all time quarterly record of Rs 306bn in Q3 2008, a 66% increase vs. Q3 2007 as investors looked for a safe shelter and jewellery buyers returned to the market to take advantage of lower gold prices.

The demand increased to 250 tonnes in Q3 2008 from 190 tonnes in Q3 in 2007 at tonnage terms, which is a 31% increase.

According to Gold Demand Trends, launched today by World Gold Council (WGC), demand for gold jewellery in India reached 178 tonnes, a rise of 29% in tonnage over the same period in 2007. The deteriorating economic situation created a greater squeeze on consumer spending earlier. In currency terms this equated to a rise of 78%, from Rs123bn to Rs219bn.

After a slow start to the quarter, gold jewellery demand surged driven by rural economic boom, urban consumers wanting to safeguard their investments. Much of India experienced a good monsoon rainfall, which resulted in a feel good factor boosting rural spending on gold during the festive season. The data, compiled independently for WGC by GFMS Limited, shows investment demand for gold was similarly boosted by the pullback in the gold price during the third quarter.

Purchases of gold bars and coins by retail investors amounted to 71.0 tonnes, the second highest quarter on record and equivalent to a rise of 36% over the 52.3 tonnes consumed in the third quarter of 2007. At Rs. 8,700Cr the growth in value is 72% vs prior year of Rs. 5,073 crs. In certain areas, supply of small bars for retail customers reportedly dried up in the face of such unprecedented demand.

Ajay Mitra, Managing Director, World Gold Council, commented, "It has been an outstanding quarter for demand in India, the worlds largest consumer of gold. I am encouraged by the fact that both investment demand in bars and coins and jewellery demand have surged against global credit crunch impacts our nation. Golds universal role as a store of value has shone through during this quarter helping attract investors and consumers to all forms of gold ownership."

Mitra added, "Looking forward, we believe the uncertainties in the financial markets will continue, therefore driving investors towards gold and its safe haven and insurance policy characteristics." Gold has held its value over the long term and is resilient to the effects of inflation. This cannot be said for many other consumer goods, which tend to lose their value and/or deteriorate over time."

Posted On : 11/22/2008 12:18:47 PM

Gold demand increases by 66% in India