As per a latest World Gold Council (WGC) report, demand for gold in India for the September quarter (Q3) rose 47% to 139.1 tonnes in opposition to final. In an interview with Mint, Somasundaram PR, regional CEO, India, WGC, shared his views on value outlook and demand in the course of the December quarter in addition to on digital gold.
Edited Excerpts:
Are you able to give insights into gold demand for Q3?
In India, final yr was a whole lockdown, so no matter gross sales occurred had been primarily due to a few centres reopening in September. So, in comparison with that, now we have a 47% soar. Whole demand for final quarter was 139 tonnes, and is even higher than what we noticed in 2019 third quarter. Whereas demand has gone up simply by 47%, imports truly surged 187% in Q3. So, in opposition to 89 tonnes final yr, now we have whole imports of 256 tonnes within the final quarter.
What sort of demand are you anticipating this pageant season?
What we’re seeing is that imports have gone a lot forward of demand. The commerce sentiment is fairly excessive, and there may be stocking up for the pageant season. Clearly, these costs are very engaging as a result of folks have even seen highs of ₹55,000. We additionally appear to have a greater grip on the pandemic. Monsoons have been superb, in order that’s going to place extra earnings within the fingers of rural and tier III, tier IV prospects. On high of all this, we even have these social capabilities comparable to weddings, and this quarter has extra auspicious days than you’ve got ever seen. So, a mix of all that is going to make December one of the best quarter seen in a number of years.
Can you place demand stage in numbers?
It’s a little troublesome to provide an estimate, however I can provide the figures that now we have seen up to now. The fourth quarter of 2014 noticed 226 tonnes demand. Then 236, 244, 242, 236, 194 and 186 tonnes; that is the way it has moved for This fall of yearly following. Even within the demonetization quarter, it was 244 tons. So, we’re speaking about 240-220, or say 200-250 tonnes demand for December quarter this yr.
The very best ever demand for December quarter was seen in 2010 at 296 tonnes.
With the demand coming again, can count on costs to rise?
No. Truly, what occurs is that demand doesn’t drive gold’s value. Gold demand reacts to cost within the brief time period. In the long run, demand has a major affect on value – there isn’t a doubt. However within the very brief run, it’s components comparable to inflation, monsoon, obligation, value, which drive demand. We only recently launched a report referred to as ‘Drivers of Gold Demand’, which stated {that a} 1% enhance in inflation results in a 2.76% enhance in demand. Truly, funding demand will increase 4%. For the brief time period, demand will not be an element. It’s extra of US rates of interest and different geopolitical components.
What sort of demand has been pushed by digital gold in India?
Digital gold is offered by two refiners and one market. It has positively caught the flamboyant of millennials, younger folks, and small savers as it’s obtainable 24×7. It has positively grown, however it’s still–all put together–a very small portion of the market. Digital gold is a clear type of shopping for, it’s clear on value, completely protected on purity, and insolvency proof and all these options are very constructive. Given all this, it’s sure to develop. At this cut-off date, it’s restricted to small ticket wallets. Mixture clever it’s not massive on quantity, however by way of the affect it’s creating on the gold market, the sentiment, and the flexibility of individuals to purchase gold, I believe it will be one of many largest adjustments now we have seen out there. It’d turn into an enormous factor, offered there’s a regulatory framework, which is what the trade is engaged on.
Supply: Live Mint