India Q1 MCX Gold Consumer Demand Slides : WGC

India MCX gold demand hit a record high in the first quarter on investor worries over inflation and property market curbs, the World mcx Gold Council said on Thursday, bucking a lower trend in global consumption driven by higher gold prices. More information about trading tips india visit my site

Global MCX gold demand fell 5% on the year to 1,097.5 tonne in the first three months of 2012, as jewellery and technology sectors bought less gold with average prices up 23% from a year earlier, but investment demand and central bank buying helped cushion the fall, the industry group said.

China remained the world's top gold consumer for the second quarter in a row, with its gold consumer demand up 10% to 255.3 tonne, beating India's 207.5 tonne, which was a 29% decline on the year.

The WGC said investment demand in China going forward will depend on price expectations, and the performance of other assets such as property and the domestic stock market, but inflation will continue to be a concern to investors.

Disruptive quarter for India MCX gold market

India's vast MCX gold jewellery market suffered a 19% drop in demand in the first quarter of the year, and investment demand tumbled 45%, pressured by a weak and volatile rupee among other factors.

A three-week nation-wide strike among jewellers after the government announced plans to double import tax to 4% on bullion and double the duty on non-standard gold and gold jewellery to 10% hit retail demand.

"It is likely that this impact will reverse to some extent in the second quarter, as the supply chain readjusts following the three-week shutdown," said the WGC.

Central banks keep buying; investment jumps

The official sector remained a net gold purchaser in the first quarter, although the volume at 80.8 tonne showed a 43% decline from the first quarter of 2011 which witnessed an exceptional level of central bank buying, said the WGC.

The WGC expected the trend of net central bank buying to continue this year as the main driving factors remain in place, as some countries seek to diversify their foreign reserves and others try to increase gold holdings to maintain the ratio of gold to their foreign reserves.

Global investment demand in gold grew 13% on year to 389.5 tonne, as exchange-traded products recorded a 51.5-tonne inflow while demand in bars and coins recorded a 17% decrease from a year earlier.

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