World Gold Council: gold demand in India will fall to a three-year low this year

November 5, 2019

Mumbai (Nov 5)  Gold demand in India is expected to fall to its lowest level in three years in 2019, the World Gold Council (WGC) said Tuesday. Domestic gold prices have also climbed to record levels against a backdrop of falling incomes in rural areas.

Somasundaram PR, managing director of WGC's India operations, said gold demand in 2019 was likely to fall 8 per cent from the previous year to about 700 tonnes, the lowest level since 2016.

Gold consumption in India fell nearly 1/3 to 123.9 tonnes at the end of September from a year earlier, according to a WGC report.

"as gold prices rise, Indian gold demand has also been affected by weak sentiment in rural markets," Somasundaram said. The excessive rainfall caused by the monsoon has damaged the crops. " 2/3 of India's gold demand comes from rural areas, where jewelry is a traditional form of wealth storage.

India ushered in its highest monsoon rainfall in 25 years between June and September, lasting even into October, destroying summer crops such as cotton, soybeans and beans ready for harvest.

In September, Indian gold futures hit an all-time high of 39885 rupees per 10 grams. Rupee-denominated gold is up about 22 per cent so far in 2019.

Between July and September, soaring domestic gold prices and higher import tariffs cut demand, WGC said. In the first week of July, India raised import tariffs on gold from 10% to 12.5%.


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