Mumbai: Elevated gold prices have taken the sheen off gold jewellery not just in India but other parts of Asia too.
Global jewellery demand fell 16% year-on-year (y-o-y) to 460.9 tonnes in the September ended quarter, World Gold Council report showed. This is its lowest level since the June quarter of 2010.
The average quarterly gold price during the quarter was USD 1472.47, 21% higher y-o-y deterring consumers from making fresh purchases. "This price pressure was exacerbated by concerns over the health of the global economy, which encouraged many consumers to moderate their buying plans. Bright spots were few and far between, with most markets seeing significant y-o-y declines, particularly in Asia and the Middle East," said the report.
The scenario was equally dull in India, which is in the midst of a broad-based domestic demand slowdown. Jewellery demand of 101.6 tonnes was almost a third lower y-o-y due to weaker consumer sentiment. “Demand was further dented by a 2.5% rise in the custom duty to 12.5%," WGC said.
At the time when fast moving consumer goods and automobile sales have slowed down, gold demand was unlikely to a massive spurt. Still, hopes of recovery were hinging on October’s festive season. In a bid to attract customers, jewellery retailers also offered promotions – such as discounts on labour charges, but that too didn’t have much impact.
Another quarterly demand survey published by London-based data provider Refinitve showed that jewellery fabrication - the largest segment in the gold industry took the biggest hit in the September quarter. Here, offtake slumped by 26% y-o-y, representing the worst quarterly performance so far this year. Indian demand fell an extraordinary 60% for the period, Chinese and European offtake was down by 13% and 12% respectively, it said in a report on 1 November.
With gold price remaining at elevated levels in local currency terms across gold consuming and price sensitive Asian countries, a meaningful recovery in demand is unlikely. For now, investors await further clarity on the US-China trade talks, which has been among the key drivers of safe-haven demand for the yellow metal.