India's Q1 gold demand up 15% on positive mood

India's gold demand during the January-March quarter went up 15% to 191.7 tonne compared with the same period last year, mainly on account of positive sentiment and favourable policy changes, according to the World Gold Council (WGC).

The total demand stood at 167.1 tonnes during the corresponding quarter last year, according to WGC 'Gold Demand Trends First quarter 2015' report.

In value terms, India's Q1 2015 gold demand grew 9% to Rs 46,730.6 crore, against Rs 42,898.6 crore during Q1 of 2014.

"India's gold demand during the first quarter of 2015 was up 15% compared with the corresponding quarter last year, though it is still below the 5-year average. This growth is a reflection of the muted demand in the same period as last year due to crippling gold import policies, coupled with weak economic sentiment and trade uncertainty at the time of the general elections," WGC Managing Director, India, Somasundaram PR told PTI here.

In contrast, he said, following the partial removal of the import curbs (with the exception of a duty reduction) 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.

He said factors like an upward revision of GDP growth, the government's approach to bringing gold into the mainstream economy, the country's natural affinity with gold as a savings asset and the modernisation of the jewellery trade will shape a positive environment for gold this year.

"Notwithstanding the unseasonal rains in the early part of the calendar year, which will impact the rural economy, we expect the full-year demand in the range of 900-1,000 tonnes," he added.

The total jewellery demand for Q1 grew 22% to 150.8 tonnes compared with 123.5 tonnes last year.

In terms of value, jewellery demand stood at Rs 36, 761.4 crore, a gain of 16% from Rs 31, 706.4 crore in Q1 last year.

However, the total investment demand slipped 6% during the January-March quarter to 40.9 tonnes compared with 43.6 tonnes in same period last year.

In value terms, investment demand declined 11% to Rs 9,969.2 crore from Rs 11, 192.2 crore in the first quarter of 2014.

Similarly, the total gold recycled in India went down 40% to 18 tonnes in Q1 of 2015, compared with 30 tonnes a year ago.

Going forward, Somasundaram said the coming quarters are expected to be better than the first one, which in India is not considered a good period for gold demand.

When asked about imports this year, he said it is likely to grow in line with demand growth, which is expected to be in the range of 10-15% this year.