Gold Demand Stays At 855 Tonne In 2001

Gold demand in India has remained unchanged at 855.2 tonne in 2001 as against 2000. According to a World Gold Council report, there was a 19 per cent increase in demand in the first half of 2001 as against the same period in 2000, mainly due to the wedding season. This was counter-balanced by weakness in the second half caused by a number of factors, including a prolonged inauspicious period for gold buying during September and early October, concerns over the economic slowdown and the volatility in gold prices post-September 11.

Demand was also affected by the Gujarat earthquake in January 2000. In the fourth quarter, demand was 19 per cent lower than a year earlier at 185.1 tonne.

The year 2001 was also characterised by a sharp rise in official imports, up 11 per cent year on year to 593.6 tonne, at the expense of unofficial imports, which fell sharply following the reduction in import duty announced in the 2001-02 budget.

The outlook for gold demand at the start of 2002 is, however, more promising than the experience in the second half of 2001. There are many auspicious days for weddings in the Hindu calendar and economic confidence is reviving.

After the turbulence in the third quarter, the demand for gold finished the year on a stronger note, touching 877.1 tonne. The total demand in 2001 was 3,235.1 tonne, 2 per cent below the previous year.

The investment component of demand made solid gains during the fourth quarter, which was 8 per cent higher at 109.9 tonne. This was largely due to the initial "safe haven" buying following September 11, but was prolonged by financial uncertainties in Japan and in some other countries and by falling interest rates on currency assets. Investment demand in 2001, therefore, managed a rise of 4 per cent to 394.9 tonne against 378.5 tonne in 2000.

New annual records were set in Mexico, Saudi Arabia, the UAE, the UK and Vietnam. Jewellery demand in the US, despite the economic and political climate, was a record for the 11th successive year.