India back to being world’s top gold consumer
Mumbai (Nov 13) India reclaimed its world’s top gold consumer crown from China as demand for jewellery surged almost 60% in the third quarter of the year, fresh data from the World Gold Council (WGC) shows.
Global demand, however, fell to its lowest in nearly five years as Chinese buying slid by a third and gold jewellery, the biggest single area of consumption, dropped 4% to 534 tonnes.
Overall, the south Asian nation —which had lost his position as the world’s No.1 gold consumer to China in 2011—bought 39% more gold in the run-up to Diwali and the start of the traditional wedding season.
The WGC said that a weakening of gold prices in rupee terms had boosted demand in India, and that confidence in the new government led by Narendra Modi had also contributed to the rise.
The increase in Indian purchases is more marked because demand for gold in the same period in 2013 was particularly weak, due to government restrictions on gold imports designed to limit the country's current account deficit.
“It is now beyond debate that import restrictions have had little impact on the demand for gold and yet have strengthened the unauthorized supply channels,” according to WGC India’s Managing Director P.R. Somasundaram.
Gold smuggling into India has skyrocketed since the government ratcheted up restrictions and taxes on legitimate imports of the precious metal. According to the council, about 200 tons of gold came through unofficial route last year and a similar quantity is also expected this year.
WGC Managing director of investment strategy Marcus Grubb noted the fiures for India and China this quarter reinforce the need to understand the factors which underpinned an "exceptional Q3" last year.
"People around the world buy gold for different reasons at different times, reinforcing the unique self balancing nature of the gold market. With recycling at a seven year low and mine supply looking increasingly likely to be constrained in the future the outlook for physical gold demand remains strong,” he said in today's statement.