| India Jewellery Retail WGC estimates Q114 gold jewellery demand dips -9%; expects easing of regulatory restrictions to improve demand | ||
World Gold Council (WGC) released gold demand trends for Q1CY14. India Gold demand in the first quarter was adversely impacted by uncertainty regarding gold import curbs and electoral restrictions. Local premiums declined from the previous quarter after reaching a high of over US$150/oz (in the December quarter).
Q1CY14 trends – India gold jewellery demand (in volume terms) declined -9% in Q1CY14 to 145.6T. But this demand was at par with past five year average. Investment demand (bar and coin) also remained restrained and below five year quarterly average declining -54% y/y in Q1CY14 (in tonnage terms).
India Jewelry Demand Quarterly Volume Trend (Tonne)
Source: WGC (World Gold Council)
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India Jewelry Demand Quarterly Value Trend (US$ Mn)
 Source: WGC |
India Investment Demand Quarterly Volume Trend (Tonne)
Source: WGC
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India Investment Demand Quarterly Value Trend (US$ Mn)
Source: WGC
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Easing of regulatory restrictions could lead to higher gold demand – According to WGC, in addition to uncertainty surrounding import curbs (whether these will be lifted in 2H which led to some reluctance among consumers to buy), gold demand in Q1 (and to some extent in Q2) was impacted by restrictions imposed on free movement of cash and other assets which dampened genuine purchases of gold. WGC noted that “India is a source of strong latent demand, which will be unleashed as and when the government restrictions on gold are eased. Indicative of this is the strength of demand in the UAE, which can be taken as a proxy for Indian demand given the prevalence of non-resident Indians among the gold-buying populace”. UAE saw demand of 22.1 T which was the highest quarterly total since Q32008 as per WGC aided by lower gold prices.
Decline in premiums QoQ - Local premiums, after reaching ~US$150/oz in the December quarter, declined due to subdued demand and marginal easing on the supply front (import licenses were granted to five additional banks to import gold).
Local gold price premiums (weekly) US$/oz
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Source: WGC
India gold supply estimates
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