Indians on gold buying spree, while Chinese gold imports tumble

Demand for gold in China is reportedly dropping, where as it is on the rise in India.

According to a report appearing in the Wall Street Journal (WSJ), India and China are the two largest consumers of the yellow metal in the world, and this divergence in demand is being seen as unusual.

The WSJ report says that normally, gold buyers in both countries snap up the metal when it is cheap, and sell it when it gets expensive, but this year, with the price of gold hovering around the USD 1,200 an ounce mark, there is an expectation that China's gold imports may tumble by as much as 20 percent.

The report further goes on to say that China accounts for nearly a third of global gold consumption, while India accounts for 20 to 25 of the world's gold consumption, and is surging.

The WSJ quoted World Gold Council figures, as saying that China's gold imports fell seven percent from a year ago to 272.9 metric tons during the first quarter of 2015, led by a 10 percent slide in jewelry consumption, while demand in India rose by 15 percent to 191.7 tons, and jewellery sales increased by 22 percent.

The New York-based daily has also said that one of the reasons why Chinese buyers are shying away from purchasing gold is because of the government's ongoing anti-corruption crackdown. It claims people are now more wary about indulging in conspicuous consumption.

In India, however, it says that a pent-up demand has surfaced because of the removal of several bottlenecks, such as a rule that a portion of all gold imports had to be re-exported.

The buying of gold in India also reflects new-found confidence in the economy since the election of Prime Minister Narendra Modi's government in May last year, the WSJ quoted Singapore-based Phillip Futures analyst Howie Lee, as saying.

In India, demand peaks after the monsoon ends in September, bringing a flurry of festivals and weddings-occasions when it is considered auspicious to buy gold.