Gold demand may slip on less auspicious days in 2012

Gold demand in India, the world's biggest consumer, is likely to soften this year due to a lower number of auspicious days in the 2012 Hindu calendar, according to the World Gold Council (WGC).

"India maintains a strong cultural link with the metal. A lower number of auspicious days in the 2012 Hindu calendar relative to recent years is likely to temper gold demand to some degree," the WGC said in its latest report.

However, India's importance in the global gold market will not diminish, even if demand growth softens, it said.

Consumers normally buy gold during festivals because they consider them auspicious times for gifts and investments.

"Gold's role as inflation hedge should bolster its appeal, particularly in countries such as India, China and Vietnam, that continue to be afflicted by high inflation," WGC said.

According to the report, the country's total gold demand in 2011 had declined slightly to 933.4 tonne against 1,006.3 tonne in the previous calendar year, due to drop in jewellery demand following volatile prices and weak rupee.

Jewellery demand dipped to 567.4 tonne in 2011 from 657.4 tonne in the previous year, though demand for gold coins and bars rose to 366 tonne from 348.9 tonne in the reviewed period, it said.

Last year, 1037 tonne of gold was available in the domestic market, of which 967 tonne was imported and the rest was from other sources like reclycled, it added.

WGC, the market development organisation for the gold industry, further said that demand for gold has grown in the world, barring India, in the last one year.