MUMBAI (Scrap Monster):  The latest Demand Trend Report for the quarter ending March 31st released by the World Gold Council (WGC) forecasts that Indian gold demand is likely to remain muted during the second quarter of 2015. This is mainly on account of the possibilities of unseasonal rains during late-March and early-April taking a hit on rural gold demand during the forthcoming quarter. However, the demand is unlikely to drop significantly during the course of the year.

 

India’s gold demand surged nearly 15% during the first quarter, mainly due to relaxed import restrictions and falling international gold prices. The demand totaled 192 tonnes during the three-month period from 167.1 tonnes a year before. Meantime, overall gold imports by the country touched 226.9 tonnes during the quarter, 28% higher year-on-year.

 

According to WGC data, gold jewellery demand during Q1 2015 rose 22% to 150.8 tonnes. However, the investment-related gold demand in the country dropped by 6% to 40.9 tonnes during the quarter. Surprisingly, gold-backed exchange traded funds (ETFs) recorded net buying of 25.7 tonnes for the first time since 2012.

 

According to WGC, the 22% rise in gold jewellery demand is mainly due to unusual weakness during the corresponding quarter last year, rather than any specific demand outburst during Q1 2015. The jewellery purchases had witnessed unprecedented weakness during Q1 2014 on account of several factors including tightened curbs on gold imports, uncertainty ahead of elections and restrictions on gold transactions. In comparison, conditions improved during the first quarter this year, thereby resulting in boosted demand, WGC noted.

 

The WGC Demand Trends Report forecasts the country’s gold demand to range between 900 tonnes and 1,000 tonnes in 2015, marginally higher when matched with the 842.7 tonnes demand recorded during the previous year.