Gold demand in India rose by 15% to 191.7 tonnes in Q1FY15, as against 167.1 tonnes in Q1FY14, as per a report by World Gold Council.
In value terms, India’s Q1 2015 gold demand grew 9 per cent to Rs 46,730.6 crore, against Rs 42,898.6 crore during Q1 of 2014.
Pockets of strength in jewellery were balanced by weakness elsewhere as demand responded to local conditions in each market. Higher volumes in India, the US and the smaller South-East Asian markets were set against declines in China, Turkey, Russia and the Middle East. The net result was a 3% year-on-year contraction in the sector.
A similar divergence occurred between the different categories of investment demand. ETF flows were positive for the first quarter since Q4 2012 as Western investor attitudes towards gold turned more benign and bearish sentiment subsided (Chart 1).
Source: Metals Focus; World Gold Council
Conversely, investment in bars and coins came under pressure in a number of areas: strengthening stock markets in India and China drew attention away from gold, and profit-taking in Turkey and Japan was a response to price movements. Nevertheless, global investment in bars and coins still far exceeded historical (pre-crisis) norms and total investment demand expanded by 4% compared with Q1 2014.
Outside of the realm of consumer demand, buying by central banks and other official sector institutions stayed on an even keel – virtually unchanged from the same period the previous year. Between this and the technology sector, demand was barely 2t lower year-on-year.
Even in changeable conditions, the gold market remains well supported. This contrast between the global picture and the more granular demand data clearly demonstrates the multi-faceted nature of the gold market. The numerous and varying roles that gold plays means it responds to different cues in different ways, smoothing out the fluctuations occurring at a more localised level.