The lure for yellow metal shows no sign of abating. India's gold demand grew 15% during the first quarter of calendar year 2015 at 191.7 tonne, against 167.1 tonne a year ago, as per the gold demand trend report released by the World Gold Council.
The trend indicated that the gold market will remain steady in the coming quarters. "This growth is a reflection of the muted demand in the same period last year due to crippling gold import policies coupled with weak economic sentiment and trade uncertainty at the time of the general elections," said Somasundaram PR, managing director, India, World Gold Council.
"The unseasonal rains and hailstorms that hit some parts of the country in late March and early April may undermine some elements of rural demand. However, the drop may not be significant during the course of the year," said Somasundaram.
The gold market trends clearly indicate that after the Reserve Bank of India (RBI) scrapped the controversial 80:20 gold export norms, the demand for jewellery spiked 22% to 150.8 tonne. Under the 80:20 export norms, which was implemented to curb high gold inflow and the widening the current account deficit, at least 20% of the imported gold had to be mandatorily exported before bringing in new lots.
However, this increase in demand was more of a reflection of unusual weakness during the first quarter in 2014 than any particular strength in January-March, 2015, the WGC report said.
According to WGC, there are a number of factors that will shape a positive environment for gold this year: an upward revision of GDP growth, the government's approach to bringing gold into the mainstream economy, ensuring that gold becomes a fungible asset akin to any financial asset, the country's natural affinity with gold as a savings asset which will support it becoming embedded in the financial sector and finally the modernisation of the jewellery trade.
Globally, the demand for first three months of 2015, dipped 1% to 1,079 tonne shown stable and steady demand. While consumer demand (made up of jewellery, coin and bar) was at 854 tonne, a fall of 5% from the 902 tonne reported during the same period last year. The total demand for India will be expected to remain 900-1,000 tonne in 2015, said the report.
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