The demand stood at 1,038 tonnes in Q2 of 2014, the WGC Gold Demand Trends report for Q2 of 2015 showed.
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In value terms, gold investment demand went down 31 per cent to Rs.
In China, the largest source of market for jewellery globally, demand slid as slower economic growth and movements in the stock market weighed.
Global demand for gold jewelry was down 14 per cent on year to 513 tonnes.
“…coupled with rising rural inflation and the government’s decision to trim the prices at which it purchases rice and wheat from farmers, incomes in these areas have been doubly squeezed”, it said.
“Assuming that we have the scenario that IMD has predicted, then certainly it will lead to muted rural demand during Diwali”, Somasundaram said.
Demand for bars and coins decreased on a global level by 15% to 201.4 tons, while gold ETFs recorded outflows of 22.9 tons in the second quarter. “In addition, falls in the gold price have historically triggered buying in price sensitive markets and we are already seeing early indications of this across Asia and the Middle East. Conversely, sharp falls in Chinese stock markets have shaken the largely consumer investment base and we are seeing early indications of interest in buying gold again – all illustrating the unique self balancing nature of gold demand and the diverse drivers which underpin it”. He said that the council has factored not a good monsoon, but expect an uptake on general economic trend, and from Q3 it will see a real growth.
The recent slump in gold prices, down more than 7% in July, should also help with physical demand, according to the report. “The apparent weakness in Q2 2015 relates to strength seen in previous years, especially in 2013, when consumer demand grew exponentially (…) This front loaded some of the demand that normally would have been done later”, he concluded.
In China, jewellery demand dropped five percent. This contrasted with sizable losses suffered by small, independent jewellers in Tier 2, 3 cities and below. This was enough to pull down overall global demand by 12 per cent year-on-year to 915 tonnes, according to the WGC report.
Elsewhere, central banks continued to be strong buyers of gold. This may have been driven by refiners actively seeking out supplies of dore to make the most of the difference between duties on dore and bullion imports.
World Gold CouncilThe World Gold Council is the market development organisation for the gold industry.
Looking at Indian jewellery demand on a half-yearly basis, the net impact is a modest decline of just over 7t. In US dollar terms, gold traded within a narrow US$70 range.
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Total jewellery demand was down 23 per cent at 118 tonnes compared with 152.6 tonne in the same quarter a year ago.
