Physical Gold Demand Strong; Indian Buying To Abate

Frankfurt (May 26)  Commerzbank says physical gold demand from key consuming nations such as India and China has been strong lately, although Indian demand may wane. Analysts cite data from the Census and Statistics Department of Hong Kong showing that China imported 74.2 tonnes of gold from Hong Kong on a net basis in April. “Although this was less than in the previous month, it was 8% up year-on-year,” Commerzbank says. “India also imported a large amount of gold last month – namely 94 tonnes, according to figures from the Indian central bank. A good half of this total came from Switzerland. Thus physical gold demand in the core demand countries has remained very robust of late. Nonetheless, there are growing doubts on the market that India will maintain this high import level throughout the year.” Analysts note that both the World Gold Council and Thomson Reuters GFMS believe that gold demand there could slow in the second half of the year – normally a period of high demand – because a goods and services tax is to be introduced in India on 1 July. “Jewelry retailers may well continue to build up their stocks of gold until that point, however,” Commerzbank says. “GFMS therefore expects to see relatively high gold imports (450 tonnes) in the first half year, followed by relatively low imports (250 tonnes) in the second half. Predicting imports of only around 525 tonnes for the year as a whole, the WGC is taking a considerably more pessimistic view.”

Source: KitcoNews