Mumbai, Feb. 14: The country’s gold demand dipped 12 per cent in 2012 to 864.2 tonnes from 986.3 tonnes in the previous year, the World Gold Council (WGC) said in a report.
However, following a first half in which consumers faced headwinds in the form of higher import duties, market turmoil over proposed measures to curb imports and a sharp rise in the local price, the second half of the year saw a strong revival in demand.
Gold demand in India surged 41 per cent to 261.9 tonnes in the fourth quarter of 2012 (October-December). Besides the wedding season and the festive period, demand was stimulated in December when jewellers scrambled to buy gold based on “well-founded” expectations that the government would raise import duties on the yellow metal, the report said.
The government and the RBI have been concerned about gold imports — the only single factor they have tried to control through duty hikes to discourage imports — as they grapple with the need to bring down the current account deficit which is projected to top 4.2 per cent of the gross domestic product this fiscal.
In 2013, the WGC expects the demand to be in the 865-965 tonne range, an 11 per cent increase at the upper end, depending on further government measures.
India is likely to remain the biggest market for gold this year followed by China.
“China and India remain the world’s gold power houses. In India, consumer sentiment towards gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system like India, gold has an important role to play,” WGC managing director, investment, Marcus Grubb said.
Globally, gold demand fell 4 per cent last year for the first time since 2009 as jewellery buying abated in India, China and the US, while European coin and bar investment dropped. While consumption is expected to stabilise this year, it may be some time before it revisits record levels seen in the depths of the financial crisis, the WGC said.
“Demand will remain high, but we’re talking small single-digit numbers in terms of growth from the current tonnage level,” Grubb said.