India retains its top position as the largest gold consumer in the vigorous gold market in the third quarter, informed World Gold Council (WGC) – a commercially-driven marketing organisation funded by the world’s leading gold mining companies – on Wednesday (Nov 19, 2008) while releasing the third quarter (Q3) result.
In Q3 (July-September) gold result, India has registered 31% more gold demand of 40 tonnes (in terms of weight) rising to 250 tonnes from 190 tonnes translating worth of 65% increment in US dollar as against previous year’s result for the same quarter. In jewellery, the demand reached to 29% higher of 178 tonnes, mounting Rs.21,900 crore from 12,300 crore, stated Gold Demand Trends, launched by WGC.
Describing the reason of this unprecedented escalating demand in India, WGC said that the deteriorating global and domestic economic condition, volatile stock market, lowering price of gold, good monsoon and festival season had encouraged people to buy or invest in gold.
According to WGC, the surge in demand rose due to rural economic boom as this year’s good monsoon had encouraged the rural public to buy gold jewellery while urban consumers wanted gold in form of coins and bars for safeguard investment as viewing the present global and domestic economic condition, gold is being assed the best option.
On the global level, as WGC said, the demand of gold also reached to all time quarterly high record of Rs. 30,600 crore, a significant 66 per cent rise over the third quarter of 2007.
“Dollar demand for gold reached an all time quarterly record of $32 bn in the third quarter of 2008 as investors around the world sought refuge from the global financial meltdown, and jewellery buyers returned to the market in droves on a lower gold price,” cited WGC by adding, that this figure was 45% higher than the previous record in Q2 2008. Demand in tonnage is also 18% higher than a year earlier.
‘Identifiable investment demand, which incorporates demand for gold through exchange traded funds (ETFs) and bars and coins, was the biggest contributor to overall demand during the quarter,’ stated WGC in a press statement.
This was 382 tonnes more, double than last year’s level translating of worth $10.7-billion, added WGC. ‘The quarter also witnessed widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven,’ the release added.
The demand of gold also reached higher in China, Middle East, Indonesia and some European countries including France - a net investor in gold for the first time since the early 1980s- while, on the other hand, it also witnessed the down trend in US and UK, where the recession is worsening.
The demand of gold declined in the retail market of US by 9% in value and 29% in tonnes, whereas in UK, it has been registered the slumping of 5% in value and 26% in tones, said WGC.
WGC also stated that Q3 also witnessed widespread reports of gold shortages among bullion dealers across the globe, while ‘in certain areas, supply of small bars for retail customers reportedly dried up in the face of such unprecedented demand’.
‘The Gold ETFs enjoyed a record quarterly inflow of 150 tonnes in Q3; the jewellery demand marked a record of USD 18-billion while the purchases of gold bars and coins by retail investors amounted to 71 tonne against 53.3 tonne registered in the same period last year, a rise of 36 per cent,’ added WGC.
WGC also reported about falling in demand came in Industrial and dental field by 11% down (104 tonnes in weight) in Q3. The demand of gold fell most in electronics field, which was known as the largest component of industrial demand.
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