India's gold demand falls 29% in July-September quarter on record prices, says World Gold Council

Gold prices in the domestic market keep rising, and other economic factors are also at play. As a result, Indian buyers have stayed away from gold to some extent, according to the latest report of the World Gold Council (WGC).

The report says India's total gold demand in the third quarter of the year, from July to September, fell 29 per cent year on year to 162.5 tonnes. In terms of weight, this is a sharp fall.

There is another side to the picture, however. Because gold prices were very high, the total value of the market rose instead of falling. The total value of gold demand in the quarter rose 3 per cent to Rs 2,41,900 crore. In the same period last year, the figure was Rs 2,35,090 crore.

The average price of gold during this period was $4,262 an ounce. The report says this works out to about Rs 1,48,891 per 10 grams, excluding import duty and GST.

Why did buyers cut back? The WGC report lists the main reasons: a record rise in the price of gold, changes in import duty, and a shift in buyers' purchasing habits. According to the report, buyers have begun to act more prudently after the price rise and are avoiding non-essential purchases.

The slowdown was also visible in the jewellery segment. Demand for jewellery fell 20 per cent to 99.9 tonnes. Even so, because prices are high, the value of jewellery sales rose 16 per cent to Rs 1,48,700 crore.

Sachin Jain, regional chief executive officer for India at the World Gold Council, said rising prices have certainly changed the way buyers purchase, but gold's long-term importance and its lustre endure.

The market also received some support. Prices eased somewhat at the end of the quarter. The festival season also helped, especially the August festivals in south India, which propped up the market.

For now, the market suggests Indian buyers are balancing their budgets against their needs. With prices rising, people are also turning in large numbers to exchanging old gold for new designer ornaments, alongside buying new jewellery.