Demand for Bangles to Pendants Jumps in India as Curbs EaseSwansy Afonso
Gold jewelry sales in India climbed in the first quarter as an easing of state curbs on bullion imports increased supplies, countering a drop in consumption in China, according to the World Gold Council.
Demand for everything from necklaces to bangles and rings surged 22 percent to 150.8 metric tons from a year earlier, while imports increased 28 percent to 226.9 tons, the London-based group said in a report on Thursday. Chinese sales slid 10 percent to 213.2 tons as a slowing economy and a rally in stocks curbed appetite for the metal, it said.
Increasing Indian sales may help support gold prices that have declined for three straight quarters. The South Asian country is set to become the world’s top consumer this year as economic growth accelerates and China’s booming equity markets reduce the appeal of the precious metal, said P.R. Somasundaram, managing director in India.
“India demand will be purely driven by economic growth,” Somasundaram said by phone from Mumbai. “As long as growth doesn’t change, you will see that savings by and large into gold remain at same or elevated levels. China’s equity markets are doing much better and have absorbed a lot of savings.”
The South Asian nation imported 891.5 tons of gold last year to meet demand of 811.1 tons, according to the latest estimates by the producer-funded council based on data from consultancy Metals Focus Ltd. Consumption in China was 973.6 tons in 2014, council data show. The two Asian countries make up about 50 percent of total global demand.
India’s economy will probably expand 7.5 percent this year, exceeding China, according to International Monetary Fund forecasts.
Demand slowed last year due to the government’s crippling gold import policies, weak economic sentiment and trade uncertainty, Somasundaram said. The country raised the import tax three times in 2013 to 10 percent and linked inbound shipments to re-exports to contain a record current-account deficit. The restrictions were withdrawn in November after the deficit narrowed. Only the import tax remains.
“The environment for gold has been encouraging in the past few months,” Somasundaram said. Unseasonal rains and hailstorms that hit some parts of the country in late March and early April may temper demand in the second quarter, specially in rural areas, the council said in the report.
Bullion for immediate delivery in London rose 0.3 percent to $1,218.76 an ounce by 5:36 p.m. in Mumbai, while futures on the Multi Commodity Exchange of India Ltd. slid 0.3 percent to 27,445 rupees per 10 grams ($1,341.22 an ounce).
Bullion consumption in India, which imports almost all its needs, will rise to between 900 tons and 1,000 tons this year, Somasundaram said.
In China, consumption of gold jewelry weakened because of the slowing economy, rallying stock markets and a cautious outlook for prices, the council said. While the government’s anti-corruption drive continues to restrain demand, most of the effects have already been felt and it should have a minimal impact on future year-on-year comparisons, it said.