India’s gold demand for 2018 was marginally down at 760.4 tonnes in 2018 against 771.2 tonnes in the previous year. Both jewellery and investment demand were down in 2018 as well as in Q4 of the calendar year.
Jewellery demand in India for 2018 was down by one per cent at 598 tonnes as compared to 601.9 tonnes in 2017 and the investment demand was down by 4 per cent at 162.4 tonnes against 169.3 tonnes in the previous year.
“Consumers were cautious in the face of high and volatile local gold prices. Investment demand received its usual seasonal boost during Diwali with 56.4t – the strongest quarter in the year, but still it was 5 per cent down from Q4 2017. Demand was constrained due to relatively fewer auspicious wedding days and higher price volatility leading to a particularly pronounced effect on Q4 gold demand,” said Somasundaram PR, managing director, India, World Gold Council.
Recycled gold demand too was marginally down, indicating that the secondary market too remained subdued. “The trends since 2015 indicate rather clearly that transparency measures have had an impact on gold demand. There is an urgent need for the industry to organise and collectively address issues of trust and innovation, in order to face the inevitable next wave of transparency measures and grow gold’s share of consumer spend. Considering the impending elections and a likely increase in spending, we expect full year demand to be in the range of 750-850 tonnes,” said Somasundaram. Global demand was 4 per cent up in 2018 at 4345 tonnes. RBI buying touched a new record high of 651.5 tonnes, while coin demand surged to reach a five-year high of 236.4 tonnes, the second highest on record.
Inflows into gold-backed exchange traded funds fell 67 per cent to 69 tonnes against 206.4 tonnes in 2017. But Q4 of 2018 saw ETF inflows surging. Stock market volatility and signs of faltering economic growth in key markets fuelled a recovery in Q4 2018, with inflows growing to 112.4 tonnes from 32.5 tonnes.
“I don’t see any of the risks that investors and central banks are worried about fading anytime soon and I expect gold to remain an attractive hedge in 2019,” said Alistair Hewitt, Head of Market Intelligence at the World Gold Council.