- Indian gold imports reached just 26.3t in September 2019 – 61% lower than the same month last year.
- The domestic gold price was 2.4% lower in September compared to August, but 18.7% higher y-t-d.
- With weak physical demand, the discount in the local gold market reached a peak of US$55/oz in September, but narrowed to US$29.5/oz by the end of the month.
- Monsoon levels in 2019 are the highest for 25 years; Kharif sowing almost flat y-o-y.
Consumer demand weak in September
Following weak domestic retail demand in the preceding three months, gold demand remained soft in September. Domestic spot gold price (995 fineness) continued its ascendance and breached Rs39,000/10gm in first week of September to reach an all-time high of Rs39,011/10gm - on 4th September. Following the correction in international gold price and a strengthening rupee, the domestic gold spot price finished the month at Rs37,475/10gm; 2.4% lower than at the end of August. The impact of such a correction in the domestic price on retail jewellery demand was muted with Pitru-Paksha falling between 13th to 28th September - a 16 lunar day period where Hindus pay homage to their ancestors. Pitru-Paksha is considered inauspicious period for purchasing gold, new house or starting a new venture.
The economic slowdown persisted in September. For example, both passenger car and motorcycle sales fell by 33.4% and 23.3% y-o-y respectively in September. The slowdown in domestic economy also impacted Goods and Services (GST) collection which fell to a 19-month low of Rs919.16 bn (Chart 1).