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China pips India as largest gold market

China has officially overtaken India as the largest gold market in 2013 by registering a demand of 1,066 tonnes (807 tonnes) against 975 tonnes (864 tonnes) logged in India. Unlike India, the Chinese Government has a stated policy to boost gold trade as the country emerged as one of the largest producers of gold.

Somasundaram PR, Managing Director, World Gold Council India, said that the increase in Chinese demand was due to the Government’s pro-gold policy that helped make the yellow metal a trusted investment avenue.

“Chinese Government’s gold push can also be traced to the fact that it is looking to diversify from dollar. Having secured the leadership position in driving demand, it would now look to influence prices. Even today, the price movement in the Shanghai Gold Exchange is closely watched in global markets. It is a pity that India does not even have a benchmark price,” he said.

Given the restriction on imports and high customs duty, gold demand in the fourth quarter was down 16 per cent at 219 tonnes. Demand from both the jewellery and coins and bars sectors fell two per cent and 38 per cent to 151 tonnes and 68 tonnes, respectively.

“Though the demand in the fourth quarter is down, about 150-200 tonnes of gold have been smuggled into the country. The import curbs led to artificial shortage and premium on physical gold moved up to $200 an ounce (about ₹3,000-3,500 for 10 grams),” he said.

Quoting the Government data, WGC said gold imports dipped 63 per cent between July and October following the introduction of measures to limit gold imports. Overall gold demand in 2013 was up 13 per cent at 975 tonnes (864 tonnes) with jewellery demand increasing 11 per cent to 613 tonnes and investment in coins and bars moving up 16 per cent to 362 tonnes. The sharp fall in gold prices during the first half of the year led to spurt in demand.

Gold imports were down 55 per cent at 114 tonnes (256 tonnes) in the December quarter while domestic recycling was down 29 per cent at 17 tonnes. Gold price in the dollar term was down 15 per cent at $1411 an ounce. However, the drop in rupee term was lower at 8 per cent to ₹26,440 for 10 grams as rupee mostly depreciated during the year.

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