India gold demand up 71% in Q2

The unprecedented fall in gold prices in April this year led to a spike in demand for gold in India, with the April-June this year (Q2) demand at 310 tonnes, up 71 per cent from 181.1 tonnes in the corresponding period in 2012, according to World Gold Council (WGC) report. Further, a survey of Indian and Chinese consumers between May and July this year by WGC revealed that in July, 66 per cent of them expected gold prices to increase in the next five years, up from 62 per cent in May. The average price of gold in May was $1,461/oz and $1,235/oz in July. Gold prices fell by Rs 1,250 on April 12 this year to Rs 28,350 per 10 gm, triggering a buying spree in India. Though prices pulled back subsequently, the demand remained high during the quarter also due to wedding season. The average gold price in Q2 was Rs 25,381 per 10 gm, down 9 per cent from Rs 28,004 per 10 gm in April-June, 2012, the WGC said. While jewellery demand at 188 tonnes during the quarter was up 51 per cent compared to 124.6 tonnes in the year-ago period, investment demand shot up 116 per cent to 122 tonnes, from 56.5 tonnes in April-June, 2012, according to WGC. Gold recycled during the quarter under review was down to 9.5 tonnes, from 30 tonnes in the year-ago period. The demand for gold jewellery in India was the highest in the world at 188 tonnes, followed by China at 152.8 tonnes. In case of investment demand, India at 122 tonnes was close to China at 122.9 tonnes, the WGC report said. The sharp rise is enough proof of the penchant for the yellow metal in India. The Managing Director, India, WGC, Somasundaram PR said, "The strength of second quarter gold demand again demonstrated how Indians’ remain committed to gold. The fall in the gold price last April resulted in an increase in demand for jewellery of more than 50% on last year and bar and coin demand doubled.” He added that demand slowed down in the current (July-September) quarter due to a string of measures taken by the Reserve Bank of India and the Central government to restrict gold imports. Globally, gold demand in Q2 was 856.3 tonnes (net), down 12.13 per cent from 974.6 tonnes in April-June, 2012. The record quarterly rise in demand for gold coins and bars (investment) to 507.6 tonnes, up 77.54 per cent from 285.9 tonnes in April-June 2012 was offset by "sizeable outflows from ETFs, as western investors reacted to a seemingly more positive outlook for the US economy and eventual tapering of quantitative easing,” according to the report. The outflow from ETFs was 402.2 tonnes in Q2. The 12 per cent decline in tonnage translated into 22.76 per cent drop in value terms at $38.95 billion, the lowest in five years, the report said.   DHNS