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World gold council which has released its gold demand trend report for Q4, ’12 today said that India’s imports after latest hike in import duty in end January will stagnate till market digest the hike. With such a high import figure, India’s import bill for gold has already crossed $40 billion in 2012.
Even India’s total demand of gold in fourth quarter was 41% higher at 261.9 tons compared to 185.5 tons in Q4 of 2011. In Q4 last year China’s demand crossed that of India but that may have been an aberration as in Q4 12, china’s demand remained stagnant.
WGC attributed the fall in imports in 2012 to the government’s frequent intervention to curb the burgeoning current account deficit. Despite a staggering increase of around 100% in gold availability from domestic sources through recycling to 117 tonnes in 2012 compared with 59 tonnes in the previous year, overall supply of the yellow meal in the country remained lower at 987 tonnes versus 1039 tonnes in 2011.
Driven largely by a staggering growth in demand of bars and coins, total gold demand in India recorded a phenomenal growth of 41% in the fourth quarter of 2012 calendar year. As against 262 tonnes of consumer gold demand in October – December quarter of 2012, the same was recorded at 185.5 tonnes in the corresponding quarter of the previous year.
Global gold demand in Q4, 2012 stood at 1,195.9 tonnes, up 4% on the same quarter in 2011. Combined growth in jewellery and central bank demand exceeded declines in the investment and technology sectors to generate the increase in overall demand. In value terms, it was the highest fourth quarter total ever, worth a near-record US$66.2bn.
For the full year, however, global gold demand in 2012 was recorded all time high at US$236.4bn. The annual volume of demand totalled 4,405.5 tonnes, down by 4% from 2011 as an increase in demand from institutional investors and central banks only partly offset a year-on-year decline in consumer demand.
“China and India remain the world’s gold power houses, and by some distance, despite challenging domestic economic conditions. In India, consumer sentiment towards gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system in India, gold has an important role to play,” Marcus Grubb, Managing Director, Investment at the World Gold Council, said.
Notwithstanding the predicted economic slowdown in China, investment demand was up 24% in the fourth quarter on the previous quarter and jewellery consumption held steady at 137.0 tonnes.
Central banks’ move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace. The official sector purchases across the world are now at their highest level for almost half a century, council said.
Despite the turbulent macroeconomic climate throughout the year, as well as the regional uncertainties affecting India and China, the two largest gold markets, annual demand was 30% higher than the average for the past decade.
