India’s demand for gold jewelry hit a four-year excessive throughout the first quarter of 2019 (calendar yr) at 125.Four tonnes, a development of 5.2% in comparison with 119.2 tonnes within the corresponding quarter final yr.
In response to World Gold Council (WGC), the primary half of the quarter was subdued. The month-long inauspicious interval of Kharmas/Malmas led to mid-January and was adopted by a pointy rise within the native gold value, hitting Rs 33,730 per 10 grams by the third week of February. Costs then swiftly retreated, falling to Rs 32,000 per 10 grams by the primary week of March. This value correction led to customers speeding to the jewelry retailers to make wedding-related purchases and pushing the native value to premium.
“The explanation for drop in costs of jewelry might be attributed to appreciation in Indian rupee. Additionally, the customers had delayed their purchases throughout the first one and a half months of 2019 as a consequence of inauspicious days. The drop in demand led to fall within the costs throughout the second half of the primary quarter,” Somasundaram PR, Managing Director, India, World Gold Council mentioned.
The worth of Jewelry demand was Rs 37,070 crore, an increase of 13% from Q1 2018 (Rs 32,790 crore), WGC mentioned in its newest report.
The expansion of 5% in Indian jewelry demand to 125.Four tonnes uplifted international demand and boosted retail sentiment. The rise in auspicious marriage ceremony days in Q1 2019 – 3 times as many as these within the first quarter in 2018 – was additionally essential to the rise in gold demand. The stronger rupee additionally benefited buyers, with demand for gold bars and cash rising by Four% to 33.6 tonnes within the first quarter, he added.
There have been 21 auspicious marriage ceremony days within the Hindu calendar throughout the first quarter of 2019, 3 times that of Q1 2018. This was a vital issue behind the expansion in India’s jewelry demand, the WGC mentioned.
Thus far, the market has been largely unaffected by the restrictions on money motion that got here into power mid-March. The code of conduct for elections restricts anybody from carrying money value greater than Rs 50,000 with out carrying documentation proving the authorized supply of, and finish use for, that money. However this might act as one thing of a headwind for demand all through the second quarter, given the timing of the election – from April 11 to Could 19.
Retail promotions additionally attracted customers. Organised retailers, aware that gold jewelry faces rising competitors from electronics, designer manufacturers and holidays, have launched promotional schemes to draw customers. Commonest had been campaigns providing reductions on jewellery-making costs, however some retailers additionally started actively selling low carat (14 carat), light-weight jewelry, particularly concentrating on youthful customers.
WGC estimates India’s gold demand in 2019 to be within the vary of 750 to 850 tonnes.