NEW DELHI: Import of gold into India surged 87.2 percent in Q1 2015 to 216.2 tonnes, against 115.5 tonnes in Q1 2014, as per consultancy and research agency focused on precious metals, GFMS.
Indian jewellery demand was up 2 percent year-on-year to 148.5 tonnes in Q1, while investment demand fell by 30.8 percent to its weakest level since 2009, GFMS said in its first quarterly report on gold. It found that Indian jewellery demand in the March quarter was hindered by heavy rains.
GFMS expects Indian consumption to recover from Q2 and for another impressive year of total gold sales. “Although heavy rains in Q1 have been negative for gold demand we continue to expect a solid year for Indian gold purchases,’ the report said.
“There were concerns about the unseasonal rains and crop damage hitting gold consumption throughout the first quarter. This was anticipated to affect gold sales in rural areas more. However, the import of gold was high in March as most of the jewelers and traders were stocking up for Akshaya Tritiya in April,’ said Bachhraj Bamalwa, past chairman, All India Gem and Jewellery Trade Federation.
As per GFMS, the year began slowly for consumption as during January and February, in anticipation of a cut in customs duty during the annual budget, consumers stayed on the sidelines despite average prices being 7 percent and 10 percent lower year-on-year in January and February respectively. It was only in during March when prices fell to their lowest level in four months that jewellery demand increased, negating earlier losses. Investment demand on the other hand fell sharply as lower price expectations and tighter liquidity conditions kept physical trading interest subdued.
GFMS also found that hand-carry trade of gold from sources like Dubai was heavily impinged after the local premiums fell in the first quarter. The premiums have been coming down since November after the 80/20 rule was relaxed.
While many Indians still find it cheaper to purchase material in the UAE the lack of a local premium in India has seen the carry trade fall significantly. Instead Dubai jewellers report that it tends to be planned purchases for events such as weddings that are driving the Indian market rather than semi-professional traffickers, GFMS found.
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