Gold sales hit a decade high despite curbs
Despite slew of measures initiated by the Indian government to curb gold imports, the demand for yellow metal has remained undiminished with...
Yellow metal consumption in India touched a 10-year peak of 310 tonnes during April-June from 181 tonnes in the same period a year ago
Hyderabad: Despite slew of measures initiated by the Indian government to curb gold imports, the demand for yellow metal has remained undiminished with consumption reaching a decade high of 310 tonnes, valued at Rs 78,681 crore, during April-June, 2013. The consumption grew almost 71 per cent from 181.1 tonnes (Rs 50,716.6 crore) in the same three-month period a year ago.
“With recent government measures to curb demand having had little impact on the quarter’s figures, consumers in India also showed continued strong appetite for gold. Consumer demand was 310 tonnes during the first quarter ended on June 30, up 71 per cent on last year,” the World Gold Council (WGC) said in the latest report.
During the three-month period, the demand for gold jewellery went up by 51 per cent to 188 tonnes from 124.6 tonnes a year ago. The bar and coin investments also zoomed 116 per cent at 122 tonnes from 56.5 tonnes a year ago. This high demand for the precious metal assumes significance in the wake of central government imposing several curbs on gold imports in order to rein in widening current account deficit (CAD). On August 13, the government raised import duty on gold for a third time in eight months to 10 per cent from 8 per cent.
“The strength of second quarter gold demand again demonstrated how Indians’ remain committed to gold. The fall in the gold price last April resulted in an increase in demand for jewellery of more than 50 per cent on last year, besides bar and coin demand doubled,” said P R Somasundaram, Managing Director, WGC India. The introduction of restrictions on payment terms for gold imports in May and an increased import duty in early June had created uncertainty in the market but had a ‘limited impact on end-user demand’, he added.
Asserting that import curbs on gold alone would not address the current account deficit (CAD) situation, omasundaram said: "While we understand the need to reduce the CAD, we believe that this can be achieved in other ways." According to him, the long term objective must be to increase the liquidity of domestic gold holdings through institutional, official channels, effectively monetising gold to support economic growth.