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Gold appetite goes cold...

Gold, fancied for long as the ultimate Indian fallback for insurance, weddings or social vanity is showing signs of turning touchy. For the world’s gold producers, India is a voracious consumer, but high prices are hitting home. Sandeep Singh tells us more.

business Updated: May 20, 2008 22:10 IST
Sandeep Singh

Gold, fancied for long as the ultimate Indian fallback for insurance, weddings or social vanity is showing signs of turning touchy. For the world’s gold producers, India is a voracious consumer, but high prices are hitting home, with a fall in domestic demand far steeper than global levels — though the yellow metal is globally a favoured asset class in troubled times such as now.

The World Gold Council said in a report released on Tuesday that in the January-March quarter, global demand fell 16 per cent overall, while India recorded a 50 per cent plunge at the retail level.

Within this, both for jewellery, the country’s preferred form of gold purchase, and investment, Indian demand dipped by 50 per cent against the world’s average of 21 per cent for jewellery and 35 per cent for investment.

“The fall in India is higher because India is a much more price sensitive market and is more sensitive to price volatility,” said Keyur Shah, associate director, World Gold Council.

The money parked in coins, biscuits, bars and exchanged traded funds are categorised as investment. ETF demand rose worldwide in the first quarter of 2008.