Strict import curbs drop gold demand by 13.5% in 2014: World Gold Council

KOLKATA: Do you live in one of those fancy residential high-rise towers that solved the urban parking crisis by having an open ground storey car parking? If yes, the government has just ruled that your flat may not be safe from an earthquake. Strict import curbs brought down India’s gold demand by 13.5% in 2014 to 842.7 tonne, according to World Gold Council’s demand trend report released on Thursday.

Jewellery demand rose 8% in the country, though, while investment demand plunged to less than half from that in the previous year. Jewellery demand grew to 662 tonne, up from 612.7 tonne in 2013, according to the data. The slide in investment demand to 180.6 tonne from 362.1 tonne in the previous year, was in sharp contrast to the global trend of 2% overall growth.

The council estimated that 175 tonne of gold entered India through the illegal route during the year, a figure lower than the nearly 200-tonne it had forecast in the earlier quarters. “India’s overall gold demand was slightly lower in 2014, which is not surprising given the crippling restrictions on imports in place most of the year. This had the biggest impact on investment demand.

In contrast, festival buying, bridal demand and a general upswing in economic sentiment led to an 8%-growth in jewellery,” said PR Somasundaram, MD, India, World Gold Council. Analysts say a bullish equity market and volatility in gold prices kept investors away from the yellow metal. The downturn in gold demand in India was sharper than the overall fall of 4% in global demand to 3,924 tonne.

In India, jewellery demand in the quarter to December was 179.1 tonne, up 19% from the year-ago period. During this threemonth period, global demand for gold rose 6% to 987 tonne, driven by jewellery and central bank buying. Somasundaram said India’s demand in 2015 should be 950-1,000 tonne. “Interestingly, we are seeing that the physical demand for gold has shifted to eastern part of the globe from the west.

Countries like China, Turkey and Singapore are witnessing good demand and are emerging as mature markets,” he said. India, being a major consumer, should take steps and come out with a gold policy to take advantage of this shift, he said, adding, “For instance, there should be clarity in buy-back of gold coins by the banks.

And I think that this is the right time to address issues like this,” he said. The report added the total supply of gold was almost the same as in the previous year, at 4,278 tonne, as recycling contracted to a seven-year low, offsetting annual mine-production growth, which was up 2% to a record 3,114 tonne. Total gold recycled in India was 77.1 tonne compared to 100.8 tonne in 2013.