After many years now, the demand for gold has come down in India also, in line with the falling demand all over the world. It has been estimated by the World Gold Council that the Indian demand for the yellow metal fell by as much as 30% in the second quarter of 2012-13 when compared with same period last year.. This fall is higher than the 19% fall that was registered in this fiscal's first quarter. The demand had fallen to a high of 44% during Jan.-March 2012 quarter. On a global basis the fall in gold demand during thequarter was 7%.
The investment and gold jewellery demand in india was down to around 181 tons during Q2 FY12 while it was 294.5 tons in Q2FY11. The gold jewellery demand was down to 125 tons and investment demand was down at 56.5 tons in Q2FY12. Over a five year average period the fall in demand is to the tune of 14%. The demand for gold bars and coins has fallen by a steep 51%.
The reasons responsible for this fall in demand are, the fall in the Indian rupee's value vs the dollar, continuing high inflation, high interest rates, fall in GDP growth,overall slowdown in the economy and now the onset of a poor monsoon. Also this year due to an extra month as per the Hindu lunar calender, there were very few auspicious marraige dates in the April -June quarter restricting the off take of gold.
The high price of gold at around Rs29,000 - 30,000 per 10 gms seems to have acted as a resistance price, impacting its demand negatively.
India's appetite for gold is matched by China. In 2011, India imported gold worth $46.3 billion. China imported around $38.7 bn worth of gold.The European Union imported gold worth $19.18 bn. The Middle East bought worth $10 bn and USA purchased $9.97 bn worth of the yellow metal. Germany imported $8.17bn, Turkey $7.26 bn and Switzerland $5.92 bn. Thailand imported $5.51 bn worth of gold.
India is the largest market for gold in the world. India imported a staggering 969 tons of gold in 2011 up from a figure of 746 tons in 2010. Indians simply love to invest in gold.Will the prices fall due to lower demand or come dhanteras and the marraige season and Indians will be once again queing up for buying gold price be damned.