[MUMBAI] Indian demand for gold is likely to increase in April-June from the first quarter due to strong buying during a major festival, lower prices and robust economic growth, the World Gold Council said on Thursday.
WGC's second-quarter gold demand numbers for India, expected to be released by mid-August, will likely show an improvement over the first quarter, when China was the top consumer for gold, overtaking India by nearly 100 tonnes. "Every quarter is going to be higher than the previous ones this year because GDP growth is expected to be higher and gold prices have come down," said Somasundaram PR, managing director of WGC's India operations.
Second quarter buying will be boosted by the festival of Akshaya Tritiya, considered one of the most auspicious days to buy gold in India.
An industry group has told Reuters that sales probably increased by 15 per cent on that day alone.
India's jewellery demand, which rose 22 per cent to 150.8 tonnes in the January-March quarter, has been a key driver in boosting appetite for the precious metal in 2015. Investment demand fell to a six-year low. "Due to certain restrictions, sales of bars and coins have faced a lot of headwinds and a part of investment demand has moved to jewellery," said Somasundaram.
India had imposed some rules on gold imports over the last two years to curb overseas purchases of the yellow metal, which were hurting its current account deficit. India's total gold demand rose 15 per cent to 192 tonnes in the first quarter, WGC's quarterly demand report released on Thursday showed.
But that was lower than Chinese demand, which despite a seven per cent year-on-year drop, logged demand of 273 tonnes. The two countries alone accounted for 54 percent of total global consumer demand in the first quarter.
India had reclaimed the No 1 gold consumer spot from China last year.
WGC maintained its demand estimate for both India and China at 900-1,000 tonnes in 2015.
Unlike India, however, recent demand signs from China have not been encouraging.
First-quarter demand in China is typically strong due to the Lunar New Year holiday but purchases have slowed since. China's gold imports from main conduit Hong Kong have also been on the decline.
An economic slowdown and rallying stock markets, along with an anti-corruption drive, have hit demand for gold in China, the WGC report said.