Indian Demand For Gold Peaked In 1996: Wgc

Demand for gold in India touched their highest levels ever in 1996, according to the latest gold demand trend figures released by the World Gold Council (WGC). Gold demand from India was placed at 508 tonnes, up 6 per cent over the previous level of 477.2 tonnes. The council, in its report, has specifically reviewed the Indian gold market liberalisation policy in India since 1992.

The council has hailed the recent decision of the government to liberalise the gold import policy further (with imports up to 10 kgs every 6 months now allowed, compared to 5 kg earlier). With the import duty on this remaining the same at Rs 220 per 10 Gramme, the council says recent the decision ``provides evidence of a willingness to pursue gold market reforms, which now seems firmly on the Indian government's agenda''.

 

The 1996 demand in the developing markets monitored by the council edged up to a record 1,825 tonnes, 1 per cent above the 1995 level. But overall, in the 10 largest gold markets, demand for 1996 was as a whole below the exceptionally high levels of 1995, with the total at 2.053 tonnes, down 5 per cent over previous year levels. ``The continued progress in India, Turkey, Indonesia and South Korea offset the softer demand in China, Saudi Arabia, Taiwan and Thailand,'' the report said.

The WGC, which studies 24 gold markets worldwide, had observed that the demand for the yellow metal rose sharply by 14.2 per cent in 1995, while in 1996 the key features were a record gold jewellery demand and continued growth in developing markets led by India and South-East Asia.

According to the council, demand in Q4 1996 for India continued to be strong, reaching the second highest level on record for any quarter. ``The demand buoyancy in the latter half of the year reflected in part the improved political and economic environment, with a stable coalition government and a tighter monetary policy. The Q4 demand for gold rose by 17 per cent to 136.6 tonnes, close to the all-time high record of 143.9 tonnes in the first quarter of 1993.

On the issue of the streamlining of the Indian gold markets policy, WGC observes that with 10 kg of gold representing a readily saleable lot in the local markets, there have been reports of travellers being aware of this change and taking advantage of it.

As a result, the local gold price premium over the international price has already fallen from around 17 per cent to 15 per cent since the beginning of 1997, thereby providing a boost to consumer demand.

In 1995, imports by NRIs totalled 228 tonnes (of the total 249 tonnes). In 1996, the gold import levels touched 279.8 tonnes. The import levels in the last quarter of 1996 reached a record high of over 76 tonnes, with exceptionally high figures in Nov-Dec. Discussing the gold demand trends, the report adds that Indian consumers are becoming more demanding in terms of product. Branded high-carat jewellery in modern designs, introduced in the Indian market during the year, is growing in popularity, particularly in the urban areas. Indians can now buy this type of jewellery in the domestic markets rather than having to buy it abroad. The council, in an earlier report, had estimated gold demand for India to scale the 500 tonnes level. India continues to remain the largest single consumer of gold followed by United States (with 345 tonnes).The Greater China region (including China, Taiwan and Hong Kong) has witnessed gold demand to be consolidating at comparatively high levels, with the demand at 208 tonnes.

The Gold Fields Mineral Services Ltd a London-based global research agency on the gold industry had said the closure of some gold mines worldwide had affected the production levels in 1995. Stewart Murray, chief executive, GFMS, who visited India last year said gold demand in India would continue to grow in line with the growth recorded in various sectors of the economy.