China to Consume More Gold than India this Year Says World Gold Council

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China to Consume More Gold than India this Year Says World Gold Council
China to Consume More Gold than India this Year Says World Gold Council

China to Consume More Gold than India this Year Says World Gold Council

In its forecast the World Gold Council or WGC has claimed that China is this year set to usurp India as the world’s biggest gold consumer by a convincing margin as according to it the strict import rules introduced by New Delhi has reduced the demand to a great extent this year. Additionally, the increased prices of gold in India has caused for less demand from the average customer in the country.

The WGC also stated that Indian demand in 2013 will be around 900 tonnes which was 1,000 tonnes in its early predictions; thus, it is quite a lot of difference. On the other hand, forecast for China remains unchanged at 1,000 tonnes. Thus, overall, China is going to topple India from the top consumer of gold where the demand for the yellow metal plummeted after the central government imposed a heavy import duty.

In its estimates WGC says that reduced demand from India might pressure global prices which are already plummeting by around 24 percent this year. Though the indications are that the U.S. Federal Reserve would not cut its economic stimulus till March next year, investors are still wary of investing in gold which has traditionally been considered the safest investment.

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Albert Cheng, the MD of WGC for Far East said that India that was facing a huge current account deficit or CAD took the administrative measures that imposed higher taxes on import have proven to be quite effective and imports have slowed down. Due to the restrictive policy it would be difficult to get to 1,000 tonnes; rather, it would be close to 864 tonnes which was the data for the last year.

He laments that if not for administrative measures, India would have seen growth like China. Up till now demand from India so far this year has reached 714.7 tonnes whereas mainland China’s demand has gone up to 779.6 tonnes, which is more than what the country consumed in the first three quarters of last year. As has been mentioned, India imposed higher duty on gold imports, gold became expensive for Indians and demand plummeted.

Weak European Market for Gold

The lower gold prices are also due to a fall in demand in European market where it fell for jewelry, bars and coins. The WGC says that demand fell 11 percent to 310 tons in the 12 months to September.

To contact the reporter of this story: Jonathan millet at john@forexminute.com