Demand for gold declined by 14 per cent to 842.7 tonnes from 974. 8 tonnes in 2014 calendar year, mainly on account of restrictions on imports of the metal for most part of the year and a high base year in 2013, according to the World Gold Council (WGC) report ‘Gold Demand Trends 2014’.
Jewellery demand rose by 8 per cent to 662.1 tonnes, while investment demand halved to 180.6 tonnes (362.2 tonnes).
In value terms, the report says, the overall gold demand declined by 19 per cent to Rs.2.09 lakh crore, of which jewellery demand fell by one per cent to Rs. 1.62 lakh crore while investment demand was down by 53 per cent at Rs.44,857.10 crore. India recycled 77.1 tonnes in 2014 (100.8 tonnes in 2013).
The crippling restrictions on imports for most of 2014 had a big impact on investment demand, WGC Managing Director, India, Somasundaram P. R., told this correspondent. But in contrast to this, festive buying and an improved economic sentiment saw jewellery demand rise by 8 per cent.
He said the investment demand was impacted by the government policies, which dissuaded jewellers from selling bars and coins. Besides, there was a cut back in consumption, and the pinch impacted the ability to put money in gold. However, gold price was not volatile in 2014 and was range-bound declining 11 per cent over 2013, he said.
The industry expects a cut in the current import duty of 10 per cent to be announced in the coming Union Budget.
The expectation of a duty cut led to some deferral of purchases. Any cut in import duty though would not be a demand driver, Mr. Somasundaram said, adding that gold smuggling, which was a massive 175 tonnes in 2014, could come down drastically or disappear in 2015 following any cut.
The WGC India chief felt that in 2015, the improved economy would benefit savings, which could see more demand for gold. “Everything considered, we expect gold demand to range between 900 and 1,000 tonnes in 2015, growing 5-7 per cent,’’ he said.
