Surging gold prices drive shift from jewellery to bars and coins: WGC report
World Gold Council (WGC), many consumers have shifted from jewellery to gold bars and coins as the prices of the yellow metal have surged, making it a preferred asset class among investors.
Seasonal factors and high prices have dampened the demand for gold jewellery. At the same time, anecdotal reports indicate persistent demand for bars and coins, indicating a likely shift from jewellery to bars and coins for some consumers. Moreover, there hasn’t been significant distress selling of gold or profit taking from gold sales that are being reported, as consumers anticipate further price increases, said Kavita Chacko, research head, India, WGC.
The period from mid-May to July is typically a slack season for jewellery purchasing. A potential revival in demand is expected with the onset of the festival season in the latter part of Q3. The sustained momentum in the domestic economy, coupled with favourable progress in monsoons and crop sowing, has raised expectations of an uptick in demand (both rural and urban) in the coming months.
The discount on the domestic gold price to international price, which stayed range bound between US$1/oz to US$12/oz during mid-April to the end of June, has widened sharply since early July. Discounts have now reached as high as US$50/oz.2 This increase can largely be attributed to increase in supply amid subdued demand in domestic markets. Market reports indicate a significant rise in imports of platinum alloy (which contain over 80% of gold content) from the UAE. Importers are reportedly
