Gold Imports by India Double as Price Drop Fuels Demand
By Swansy Afonso Nov 13, 2014 6:00 AM
http://www.bloomberg.com/news/2014-11-13/gold...emand.html
Gold imports by India, the world’s biggest user after China, more than doubled in the third quarter as a decline in prices spurred jewelry demand during festivals, the World Gold Council said.
Official purchases jumped to 204 metric tons in the three months through September from 91 tons a year earlier, council data showed today. Demand gained 39 percent to 225.1 tons, with jewelry purchases surging 60 percent to 182.9 tons, the highest for the third quarter since 2008, the council said. Coins and bar usage dropped 10 percent to 42.2 tons, it said.
Demand in India surpassed China for the second straight quarter as buyers thronged jewelry stores ahead of the main gold buying festival of Diwali last month. Imports jumped more than four fold in September, prompting the government to tighten curbs imposed last year to contain the current-account deficit and a slump in the nation’s currency. The rush in imports is unlikely to be sustained though healthy demand is seen in the fourth quarter, according to the council.
“It’s now beyond debate that import restrictions have had little impact on the demand for gold and yet have strengthened the unauthorized supply channels,” Somasundaram P.R., managing director for India at the London-based council, said in a statement. “Demand around Diwali mirrors the general optimism we see in India in relation to the economy, reinforcing the average household saver’s traditional faith in gold.”
Family Treasure
Bullion is bought during festivals in India and for weddings as part of the bridal trousseau. The festival season runs from late August to October and is followed by the wedding season. About 20,000 tons of gold are stashed in homes and temples, and Indians often inherit bullion in the form of ornaments or family treasure.
The government last year raised import taxes three times to 10 percent and introduced a rule obliging shippers to supply 20 percent of their cargo to jewelers for re-export. The curbs spurred smuggling, prompting the government to allow more banks and traders this year to import bullion.
Gold for immediate delivery in London lost 9 percent in the third quarter and traded at $1,160.31 an ounce today, while futures on the Multi Commodity Exchange of India Ltd. in Mumbai fell 2.9 percent in the July-September period.
Full-year demand in India is seen at 850 tons to 950 tons, the council said in the statement, reiterating a forecast made last month. Consumption dropped 18 percent to 619.5 tons in the nine months through September from a year earlier, while imports fell 26 percent to 525 tons, council data showed.
A revival in business sentiment under Prime Minister Narendra Modi’s government will help drive bullion demand, the council said. Modi, who swept to power in May, is aiming to accelerate growth in Asia’s third-largest economy from near the lowest in a decade.
A stable rupee and record-high equity market will help boost demand for gold in India, Sunil Kashyap, head of Asia-Pacific foreign exchange and precious metals at Scotiabank, said Nov. 11. “Under the new government, I think the economic environment is positive for higher gold demand.”
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net Thomas Kutty Abraham, Ovais Subhani
By Swansy Afonso Nov 13, 2014 6:00 AM
http://www.bloomberg.com/news/2014-11-13/gold...emand.html
Gold imports by India, the world’s biggest user after China, more than doubled in the third quarter as a decline in prices spurred jewelry demand during festivals, the World Gold Council said.
Official purchases jumped to 204 metric tons in the three months through September from 91 tons a year earlier, council data showed today. Demand gained 39 percent to 225.1 tons, with jewelry purchases surging 60 percent to 182.9 tons, the highest for the third quarter since 2008, the council said. Coins and bar usage dropped 10 percent to 42.2 tons, it said.
Demand in India surpassed China for the second straight quarter as buyers thronged jewelry stores ahead of the main gold buying festival of Diwali last month. Imports jumped more than four fold in September, prompting the government to tighten curbs imposed last year to contain the current-account deficit and a slump in the nation’s currency. The rush in imports is unlikely to be sustained though healthy demand is seen in the fourth quarter, according to the council.
“It’s now beyond debate that import restrictions have had little impact on the demand for gold and yet have strengthened the unauthorized supply channels,” Somasundaram P.R., managing director for India at the London-based council, said in a statement. “Demand around Diwali mirrors the general optimism we see in India in relation to the economy, reinforcing the average household saver’s traditional faith in gold.”
Family Treasure
Bullion is bought during festivals in India and for weddings as part of the bridal trousseau. The festival season runs from late August to October and is followed by the wedding season. About 20,000 tons of gold are stashed in homes and temples, and Indians often inherit bullion in the form of ornaments or family treasure.
The government last year raised import taxes three times to 10 percent and introduced a rule obliging shippers to supply 20 percent of their cargo to jewelers for re-export. The curbs spurred smuggling, prompting the government to allow more banks and traders this year to import bullion.
Gold for immediate delivery in London lost 9 percent in the third quarter and traded at $1,160.31 an ounce today, while futures on the Multi Commodity Exchange of India Ltd. in Mumbai fell 2.9 percent in the July-September period.
Full-year demand in India is seen at 850 tons to 950 tons, the council said in the statement, reiterating a forecast made last month. Consumption dropped 18 percent to 619.5 tons in the nine months through September from a year earlier, while imports fell 26 percent to 525 tons, council data showed.
A revival in business sentiment under Prime Minister Narendra Modi’s government will help drive bullion demand, the council said. Modi, who swept to power in May, is aiming to accelerate growth in Asia’s third-largest economy from near the lowest in a decade.
A stable rupee and record-high equity market will help boost demand for gold in India, Sunil Kashyap, head of Asia-Pacific foreign exchange and precious metals at Scotiabank, said Nov. 11. “Under the new government, I think the economic environment is positive for higher gold demand.”
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net Thomas Kutty Abraham, Ovais Subhani
