India remained cautious on gold buying in the second quarter, with demand for gold as investment and jewellery also declining. However, slightly more gold was recycled in the quarter.
India's gold demand during April-June declined 25% to 154.5 tonnes due to unseasonal rains in the first quarter that damaged crops, thereby decreasing the rural spending power, and fewer wedding dates in the period that thwarted demand, according to the World Gold Council (WGC).
In Q2 2014, demand for gold stood at 204.9 tonnes, WGC said in Gold Demand Trends report for Q2 2015.
In value terms, gold demand in India in the quarter was down 26% to Rs 37,590.2 crore compared with Rs 50,778.1 crore in Q2 2014.
"Consumer demand in India fell 25% to 154 tonnes in the April to June quarter, due to a buoyant stock market, a softening rural economy affected by unseasonal heavy rains in Q1, which damaged crops and fewer auspicious days impacting wedding-related demand.
"If, however, we look at the first half of the year, then the fall was only 7% to 346.2 tonnes compared with 372 tonne in the first six months of 2014," WGC Managing Director, India, Somasundaram PR told PTI here.
The demand, however, was robust during festivals like the Akshaya Tritiya, but people showed cautious approach towards gold expecting a weak monsoon, he noted.
Jewellery demand
Total jewellery demand was down 23% at 118 tonnes compared with 152.6 tonne in the same quarter last year. In terms of value, jewellery demand fell 24% to Rs 28,703 crore from Rs 37,807 crore in the corresponding period of 2014.
Small jewellers in Tier II and III towns were affected due to this decline in consumer demand, Somasundaram added.
Investment, recycled gold
In value terms, gold investment demand went down 31% to Rs 8,887.2 crore, from Rs 12,971.1 crore in the same period last year.
Total gold recycled in India in Q2 of 2015 was 24 tonnes compared with 22.5 tonnes in Q2 of 2014.
Somasundaram said, going forward, as most parts of the country have had good rains, it will help the rural economy, and full-year gold demand expectations are likely to be in the range of 900-1,000 tonnes, with a strong estimate for lower end.
"Our expectation though for the rest of the year is that demand will be robust, for a number of reasons. The upcoming wedding and festival season in India suggests healthy prospects for the jewellery market and we have seen a positive uptick in demand in the last few weeks as Indian consumers are taking advantage of the softening in the gold price," he added.
On imports during the last two quarters of this year, he said demand during the second half of the year will be 25-30% more than the corresponding period of last year and the shipments will track demand.
Demand during the last two quarters of 2014 stood at 436 tonnes.
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