India reclaims title as the top Gold consuming nation from China in 2014

INDIA February 13 2015 7:44 AMTweet
MUMBAI (Scrap Register): India reclaimed the title as the top gold consuming nation from China last year, despite demand being down compared to the previous year, according to data from the World Gold Council (WGC).

In its latest report, the WGC said that total gold demand in India hit 842.7 tons, down 14% from 2013. At the same time gold demand from mainland China came in at 813.6 tons, down 38% from unprecedented demand seen in 2013.

The council’s data shows that demand from Greater China, which includes Hong Kong and Taiwan, came in at 867.5 tons, a decline of 37% from the previous year.

Juan Carlos Artigas, director of investment research at the WGC, said that it is important to look at last year’s demand in a broader context than just a year-over-year change. A significant price drop in 2013 unleashed extraordinary demand from Asia, which was not expected to be repeated in 2014.

He added that despite the decline in gold demand, India and China play a very important role in the gold market. According to the council’s research, demand from those two countries accounted for more 54% of total global demand last year. That is an increase from 33% of total global demand recorded in 2005.

"The bottom line is that both China and India represent significant growth for the gold market. They are extremely important for the gold market,” said Artigas in an interview with Kitco News.

Artigas added the Indian gold market continued to face difficult hurdles in 2014 as the government maintained import restriction and high duty costs. But despite these challenges, jewelry demand in the country hit a record high of 662.1 tons.

There are expectations that demand will pick up even more in 2015 as the Indian government removed 80:20 rule import rule in November and there is a move to lower tariffs on gold.

"The outlook for India is for another year of strong jewelry demand in 2015, on the basis that the government does not impose further market-distorting policies and price volatility does not unsettle the market,” he said.

Although demand was down, the WGC said that 2014 was an important year for Chinese and Asian markets, as they started to mature and develop new infrastructure.

"Innovators in Turkey, India, China and South East Asia are developing gold products, services and platforms across the entire supply chain to boost market development. Consumer choice is expanding and the supply chain is becoming more efficient and more transparent,” the report said.

The council said that the biggest hurdle China faced in 2014 was the fact that demand was so strong the previous year. The buying frenzy in 2013 temporarily exhausted demand, the report said. However, if price pick up they would expect to see a reemergence of investor demand.