The Hindu Business Line : Indian demand for gold jewellery up 21% in Q1

THE total consumer demand in India for gold (jewellery and net retail investment) was up by 25 per cent in tonnage terms, and by 37 per cent in rupee terms, in the first quarter of 2004, compared to the somewhat depressed levels of a year earlier.

Figures published on Thursday by the World Gold Council (WGC) reveal that consumer demand for gold has improved dramatically over the last year.

Globally, too, the trend has been positive with a 12 per cent increase in consumer demand in tonnage terms and 30 per cent increase in dollar terms.

"In India, too, we have witnessed a surge in consumer and investor confidence in gold, which is reflected in the 21 per cent growth in demand for gold jewellery and a whopping 47 per cent increase in investment in gold in the form of bars & coins.

In spite of the increase in gold prices, the Indian consumers continue to be attracted towards gold jewellery.

From an investment point of view, demand for gold bars & coins has increased because of its values of providing stability and security to the overall investments and has ensured that the `shine is back' in the Indian gold market," Mr Sanjeev Agarwal, Managing Director of World Gold Council (Indian Subcontinent), said in a release.

The World Gold Council reports that although complicated by the sharp upward movement in the gold price, consumer demand for gold actually increased in monetary terms since 2001.

Commenting on the supply/demand dynamics for the first quarter 2004, Mr James Burton, Chief Executive of WGC, said: "In the face of a 55 per cent rise in the dollar gold price, historically we would have expected consumer demand to recede due to the sensitivity of Asian and Middle Eastern markets to price volatility.

Actually, this quarter the money flowing into gold from consumers was 37 per cent up on Q1 2002 in dollar terms, and 25 per cent higher than in Q1 2001, demonstrating a positive underlying trend."

"Though the trends are positively inclined for the future, other political and economic factors will be crucial for the Industry.

We expect the new Government to take some positive steps to channelise part of the Rs 5,000 crore of annual savings being invested in physical bars & coins to be routed through the banking sector in the form of a more efficient savings vehicle," Mr Sanjeev further stated.

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