Gold demand marginally up in 2015

WGC import estimates show no growth; unofficial imports halved

The country's gold demand in 2015 went up marginally from 828 tonnes in 2014 to 849 tonnes in 2015, despite a surge in the second half of the year.

Total demand was 848.9 tonnes, from 828.5 tonnes in 2014. Net imports in 2015 was 898 tonnes against 891 in 2014. P R Somasundaram, managing director of World Gold Council (WGC) for India said, “Unofficial imports is estimated to have fallen by half from around 200 tons last year which is understood to have resulted in increase in import bill.”

The year's second half saw a surge in demand, because of lower prices, of 502.3 tonnes, which was 14 per cent higher than the demand in the second half of 2014. Globally, too, demand surged in the second half of 2015. According to Gold Demand Trends report for 2015, issued on Thursday by the industry's market development body WGC, total global gold demand was flat, but it was up six per cent in the second half.

In China, which has emerged as the top gold consumer in 2015, second half demand was up seven per cent. Demand went up due to lower prices in the second half of 2015, the report said. China’s demand was 984.5 tonnes, against 813.6 tonnes the previous year.  Traditionally, India had been the top gold consumer but in 2013 and 2015, China was first. The Chinese resurgence in 2015 followed its currency's depreciation and falling stock values, prompting consumers to shift to gold. Globally, demand in 2015 was almost the same as in 2014, at 4,212 tonnes. Despite a challenging start, demand rebounded in the second half, because of sustained buying by central banks and a strong surge in China and India.

Bar and coin purchases were led by China and Europe, with strong support from the US, as investors took advantage of weaker prices amid a softening economic backdrop, financial turbulence and geopolitical tensions.

Global investment demand for the full year grew eight per cent to 878 tonnes. Overall jewellery demand for the full year was down three per cent, to 2,415 tonnes. Following a slower start to the year, “the third and fourth quarters combined produced the strongest second half-year total for gold jewellery in 11 years,” the report said.

Central bank demand for the year rose by four tonnes to 588 tonnes, as the need for diversification was reinforced by a tumbling oil price and reduced confidence in the global economy. Central banks’ demand in the December quarter rose 25 per cent to 167 tonnes, a 20th consecutive quarter of net purchasing.

Alistair Hewitt, WGC’s head of market intelligence, said: “Physical demand will continue to be supported by strong central bank purchases and continued buying of jewellery, bars and coins by households across the world, led by India and China. If we just look at the year to date, the investment case for gold is as strong as ever. While stock markets have wobbled, gold has performed well.”

Total supply for the year fell four per cent to 4,258 tonnes, due to lower recycling supply and mine production growth’s first quarterly contraction since 2008, of 10 per cent, as a result of weaker prices, mine closures and project delays.

Talking about India, Somasundaram said the increase in dore imports, which was now one-fourth of total imports, was a good development as value addition on that import had started taking place in India. The government’s policy initiatives should focus on improving gold infrastructure aimed at increasing value addition, he said.