Gold demand in India rose 15% year-on-year in the January-March quarter to 192 tonnes on the back of pickup in jewellery purchases owing to the precious metal’s lower global prices, and the government slashing some import restrictions.
Somasundaram PR, MD, India, World Gold Council, said on Thursday, “Following the partial removal of import curbs and the budget announcements introducing new gold products, the environment for gold has been encouraging in the past few months, resulting in buying behaviour slowly returning to normalcy.”
However, investment demand for the yellow metal, which is a seen as a safe haven, fell 6% to 41 tonnes. It was the affinity for gold jewellery, which rose 22% to 150.8 tonnes, that has boosted the overall demand.
WGC expects India’s gold demand for the full year 2015 should be around 900-1,000 tonnes, compared with 811.1 tonnes in 2014 and 960.1 tonnes in 2013.
The easing of rules, festive season demand in the second half, and overall pickup in India’s economic growth should help drive gold demand this year, said Somasundaram.
Demand in the year-ago quarter had been affected by the government’s measures to reign in the country’s high current account deficit in 2013-14. Later in November, the Reserve Bank of India scrapped gold import restrictions under the 80-20 rule which made it mandatory for all gold importers to re-export at least 20% of what was brought in.
Meanwhile, in China — which was world’s largest gold consumer in the first quarter, demand declined 7% to around 273 tonnes. The surge in China’s stock markets has eaten into demand for gold, WGC said.
Globally also demand fell 1% to 1,079 tonnes during the same period, though investment demand seems to be recovering with a 4% rise to 279 tonnes.
During the quarter, gold exchange traded funds saw net inflows for the first time since the fourth quarter of 2012.