India’s gold demand rises 2.5% in 2015 despite record jewellery sales

By: | Updated: February 11, 2016 12:31 PM

Having dropped in 2014, Indian gold demand recovered last year, rising 2.5% year-on-year to tonnes in 2015 to 848.9 tonnes--better than a flat expansion globally—following decent expansion in jewellery demand in the second half of the last calendar year, showed the data released by the World Gold Council (WGC) on Thursday.

gold demand in IndiaGold demand: Stronger demand from the world’s second-biggest gold consumer could support the global bullion price, which is trading near its highest in 8-1/2 months. (Express photo)

Having dropped in 2014, Indian gold demand recovered last year, rising 2.5% year-on-year to tonnes in 2015 to 848.9 tonnes–better than a flat expansion globally—following decent expansion in jewellery demand in the second half of the last calendar year, showed the data released by the World Gold Council (WGC) on Thursday.

WGC managing director (India) Somasundaram PR said gold demand in the country is expected to remain robust in 2016 as well.

Despite a rise in volume, however, the overall demand in value term declined almost 6% to Rs 2,02,910 crore in 2015 from Rs 2,05,750 crore in the previous year, thanks to a drop in the precious metal prices. While investment demand continues to remain weak, recording an almost 6% decline in volume term last year, jewellery demand rose at a decent pace, expanding 5.3% 2015 from a year earlier.

Somasundaram said, “Demand for gold in India has once again proven resilient in the face of a range of challenges, underlining the role of gold as an essential component of households’ savings and reinforcing the need to bring gold into the financial infrastructure. Refining is taking centre stage and it is time for the industry to look holistically and seek policy support to improve the infrastructure for gold, ensuring transparency and quality, both fundamental to making the gold schemes a success.”

He added that the “bold approach” shown by launching the gold schemes towards the end of 2015 should be carried through with a “singular focus on making gold fungible for the average household through the banking system”.

Global demand flat in 2015

The global gold demand remained flat in 2015 at 4,212 tonnes, showed the WGC data. “Despite a challenging start to the year, gold demand rebounded in the second half of 2015 as a result of sustained buying from central banks and a strong second half from China and India,” it said.

This was particularly evident in the retail investment sector, where bar and coin purchases were led by China and Europe, with strong support from the US, as investors took advantage of weaker prices amid a softening economic backdrop, financial turbulence and ongoing geopolitical tension, the WGC said in a statement.

Global investment demand in 2015 grew by 8% to 878 tonnes, compared with 815 tonnes in 2014. However, jewellery demand for the full year 2015 was down 3% to 2,415 tonnes from 2,481 tonnes in the previous year.

Central Bank demand for the full year 2015 saw a small uptick from 584 tonnes in 2014 to 588 tonnes in 2015, as the “need for further diversification was reinforced by a tumbling oil price and reduced confidence in the global economy”.

Alistair Hewitt, head of market intelligence at the WGC, said: “Looking ahead, physical demand will continue to be supported by strong central bank purchases, and continued buying of jewellery, bars and coins  by households across the world, led by India and China. If we just look at the year to date, the investment case for gold is as strong as ever. While stock markets have wobbled, gold has performed well.”

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