Author: Paul Ploumis
12 Feb 2015 Last updated at 07:32:42 GMT
NEW DELHI (Scrap Monster): The World Gold Council (WGC) ‘Gold Demand Trend 2014’ Report released today indicates that India’s gold demand dropped by 14% in 2014. Investment demand for the yellow metal has contracted sharply during the year. The sharp drop in gold imports is primarily attributed to the strict curbs on gold imports imposed by the government to bring the Current Account Deficit (CAD) under control.

The report states that the country’s gold demand totaled 842.7 tonnes in 2014, sharply lower when matched with the demand of 974.8 tonnes in 2013. In dollar terms, the overall gold demand was down by 23% during 2014. The total investment demand plunged by over 50% to 180.6 tonnes as compared with 362.1 tonnes in 2013. The drop in investment demand was mainly due to government control on sale of gold bars and coins.

On the other hand, buoyant festive buying and optimistic economic growth sentiments led to 8% growth in total jewellery demand in the country during the year. The jewellery demand stood at 662.1 tonnes as against 612.7 tonnes in 2013. However, in value terms, the jewellery demand dropped by 19% from Rs 257,211.4 crore in 2013 to Rs 208,972.20 crore during last year.

The gold imports by the country totaled 769 tonnes in 2014. This is inclusive of the grey market gold supply which stood around 175 tonnes. The recycled gold supply too declined sharply by 23.5% from 100.8 tonnes in 2013 to 77.1 tonnes in 2014. Meantime, tight restrictions on gold imports led to increased gold smuggling activities.

The report forecasts strong jewellery demand growth in India to continue in 2015, based on the assumptions that the government doesn’t impose further import restrictions and the gold prices continue to remain steady. The Council predicts Indian gold demand at around 900 tonnes to 1,000 tonnes in 2015.