Riding a liberal policy, gold demand reaches record high

MUMBAI, May 24: The gold demand in the country has reached a record of 161.7 tonnes for the first quarter of 1997, up by 38 % from the corr...

MUMBAI, May 24: The gold demand in the country has reached a record of 161.7 tonnes for the first quarter of 1997, up by 38 % from the corresponding period a year ago and 12 % ahead of the previous record of 143.90 tonnes set in first quarter of 1993.

The strenghtening in demand was attributable to a combination of growing prosperity, the marriage and festival season in January and February, low local currency gold prices and an increase in the gold investment, according to Gold Demand Trends, a publication of the World Gold Council.

The process of accelerated deregulation following the Delhi Gold Economic Conference in November 1996 and doubling of import allowances to 10 kg for non-resident Indians (NRIs), the prime source of supply of the yellow metal, will encourage more companies to import gold and pave the way for further improvements in distribution and domestic demand.

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Moreover, the new export-import policy (1997- 2002) announced this year is a more liberal policy on gold imports for the jewellery export trade.

Gold imports into India during the first quarter of this year have reached a record of 116.90 tonnes, well above the quarterly record of 76 tonnes set in the fourth quarter of 1996. The recent moves on the part of the government to liberalise the trade in gold will lead to increased legal imports away from the unofficial or parallel supplies of the yellow metal.

Demand in the 11 largest markets for gold consumption, each of which accounted for over 100 tonnes of gold demand during 1996, reached 627 tonnes in the first quarter of 1997. That was an increase of 16 % from the first quarter of 1996 and a new record for the period, 7 % ahead of the previous peak of 584 tonnes set in the first quarter of 1993. Eight of these 11 markets continued to show growth in gold demand during first quarter of 1997.

The most significant changes in demand for gold during the period compared with the first quarter of 1996 were: record quarterly demand in India( 162 tonnes, up 38 %) Saudi Arabia (68 tonnes, up 44 %) and Indonesia (42 tonnes, up 45 %).