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No more change likely in Indian gold demand

09 Dec 2014 Evaluate

Gold demand in India might rise by no more than 3% in 2015 over this year. Data compiled by rating agency ICRA forecasts the demand at 850 tonnes, compared to the 825 tonnes estimated in 2014. The World Gold Council (WGC), which represents the mining industry, puts India’s demand between 850 and 950 tonnes in 2014.

Easing import curbs, the government early this month withdrew the 16-month-old 80:20 scheme, under which at least a fifth of any import consignment had to be supplied to jewellery exporters. WGC’s managing director Somasundaram said that, India’s gold demand will not change much despite the government’s decision to scrap 80:20. Only the supply mode will change. The quantity earlier imported through smuggling would come through official channels.

Around a fourth of India’s demand is estimated to have been met through ‘unofficial channels’ in 2014. Import of the yellow metal is likely to rise 15% to 850 tonnes in 2015, as compared to the 2014 estimate of 740 tonnes.

Gold investment demand is expected to decline to 170 tonnes in 2015 from the 190 tonnes estimated in 2014. This is likely to be matched by a proportionate increase in demand from the jewellery sector. ICRA believes the latter demand will rise to 680 tonnes in 2015 as against 635 tonnes in 2014.

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