Indian demand for gold coins fell 5% in Q2 2018 on annualised basis to 39.3 tons due to buoyant performance of equity markets with Bombay Stock Exchange (BSE) Sensex up 4% in the first half of the year and government measures to curb unaccounted wealth, according to World Gold Council (WGC) report.
The depreciation in rupee also caused the local prices to go up with average rupee gold price in Q2 up 7.4% on annualised basis and 2% up on quarterly basis.
Global demand for gold coins was subdued in Q2 at 247.6 tons even as 5/5% fall in the US dollar gold price over the quarter failed to translate into buying opportunities because of local currency weakness.
China witnessed 11% growth in gold coin demand for investment at 69.5 tons as the asset benefitted from a flight to safety amidst increasingly tense trade-war rhetoric.The yuan weakened drastically against the US dollar, falling 5% over the quarter. And the stock market slumped: the Shanghai Stock Composite index dropped 14% in the first six months of the year. The y-o-y rise was from a relatively soft quarter in Q2 2017. Bar and coin demand has held in a relatively steady range over the last five quarters, hovering between 60 and 80 tonnes.
The WGC report said that the global bar and coin market remained subdued in Q2 2018. Demand was flat y-o-y at 247.6t and, at the halfway stage of the year, is bang in line with the three-year average: 509.1t in H1 2018 compared to the H1 average of 508.6t from 2015 to 2017.
Price dips often tease out an investor response, but, for many markets, the 5.5% fall in the US dollar gold price over the quarter failed to translate into buying opportunities because of local currency weakness. Investor concerns over currency depreciation were, however, a driver of demand in some markets, most notably China and Iran.