MUMBAI (Reuters) — Indian appetite for gold jumped by more than a third in the last quarter, in sharp contrast to the rest of the world, boosted by jewellery demand for the wedding season, an industry body said on Thursday.
Demand in India rose 39 percent to 225.1 tonnes in July-Sept, the second highest on record for the quarter, even as global appetite fell to its lowest in nearly five years, according to the World Gold Council.
Consumption in the world’s other major buyer, China, tumbled 37 percent year-on-year in the same period. Although Indian demand overtook China for the quarter, it still lagged for the total from the first nine months of the year.
“Demand will continue to have positive growth over last year as this is a good demand period and a lot of marriages are happening,” said Somasundaram PR, head of the WGC’s India operations.
Jewellery demand in India surged 60 percent in the third quarter, but investment demand eased 10 percent.
The precious metal forms an essential part of a bride’s dowry in India, and is considered auspicious as a gift or offering at religious festivals.
The WGC maintained its prediction that Indian demand would reach 850-950 tonnes for the year, driven by jewellery purchases.
Investment demand is likely to fall to 25 percent of total demand this year, from 37 percent the year before, Somasundaram said, as a sharp price drop has shaken the confidence of Indians in bullion as a store of value.
The WGC said jewellery demand was also boosted by a weakening of gold prices in rupee terms and by widespread confidence in a new government, along with the onset of the festival season.
September imports surged 450 percent to $3.75 billion.
“Demand for the fourth quarter as a whole is expected to be healthy, but the September surge in imports is unlikely to be replicated,” WGC said.
The jump in Indian demand comes after a weaker period last year when consumption was hurt by curbs on imports.
Struggling with a high trade deficit, India last year raised its gold import duty to a record 10 percent and made it mandatory to export a fifth of all bullion imports.