Mumbai, December 07: Higher gold prices, increased uncertainty due to the global recession coupled with lower purchasing power because of drought are expected to hit domestic demand for the precious metal, Citi India’s Economist Rohini Malkani said in a report here.
Reduced domestic demand saw India’s imports dip 51.5 per cent year on year to just 16.5 tonnes in November.
India is the world’s largest importer of gold.
Historically, Indian gold demand has been price inelastic, with the bulk of the demand coming for jewelleries. However, record-high prices and the global recession, coupled with the drought, have kept away consumers this year, the report said.
The lower offtake could also be due to consumers meeting demand by exchanging old items, the report added.
According to the latest data by the World Gold Council (WGC), India’s gold demand stood at 137.6 tonnes in the third quarter of 2009, down 49 per cent YoY. Cumulatively, demand in 9M 09 was 264-tonnes, versus 553-tonnes in the same period last year.
–PTI