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India highest gold consumer no more, China takes over

world Updated: Feb 19, 2014 10:08 IST
HT Correspondent
HT Correspondent
Hindustan Times

For the first time, China has overtaken India as the largest consumer of gold in the world. Chinese bought 1,066 tonnes of the precious metal in 2013, compared to 975 tonnes by India, according to World Gold Council data released on Tuesday.

India’s gold demand rose 13% during the year despite import curbs in the latter half due to a foreign exchange crunch. At current prices, that is worth about R 2.9 lakh crore. But China’s consumption surged by 32%, and is likely to remain the top gold consumer in 2014 as well, WGC said.

“China has clearly articulated a policy for gold. China is doing a lot of things…They have launched exchange-traded funds, they have got the gold savings scheme through the banking system, which is all working in a very big way,” said Somasundaram PR, managing director, India, WGC.

WGC estimates Chinese gold demand this year at 1,000-1,100 tonnes, while demand in India is likely to be around 900-1,000 tonnes.
While demand for the yellow metal in India was strong in the first half of 2013, it was dampened in second half as government imposed several curbs on gold imports and hiked import duty to control the current account deficit, WGC noted.

In the October- December quarter, total gold volumes in India fell 16% year-on-year to 219 tonnes, it stated. India jewellery demand in the fourth quarter was down 2% and investment demand slumped 38%.

The government curbs led to a rise in illegal imports of the yellow metal in 2013, WGC said.

“The grey market has become very strong…We believe smuggled gold is in the range of 150-200 tonnes... if the curbs continue, we believe it will only strengthen,” said Somasundaram.

Global demand for the yellow metal declined by 15% in 2013 to 3,756 tonnes, as people who had invested heavily in gold exchangetraded funds withdrew and shifted to other asset classes as the US market improved, WGC said.

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