Jewelry demand was 703 tons
India has once again taken the torch from China and become the leading buyer of gold in 2015. India bought a whopping 703 tons of gold jewelry in the year, and its aggregate jewelry and investment demand rose 6% to reach 890 tons in the year. This rise in demand, however, was presumed to be nominal, as gold saw a price slide of almost 10% in 2015.
Higher demand figures were expected from India given the plunge in precious metals prices. This is because India is a gold-loving country, and gold-hoarding behaviour can be observed there. Gold’s fall in price thus favored the country.
Weaker monsoons in India adversely affected farmers’ disposable incomes, resulting in slightly lower-than-expected demand. The increase in debt burdens of lower- and middle-class populations, which constitute a significant chunk of India’s total population, may also be the cause of the curb in demand.
2015 was the third-largest year of imports
March 2015 saw the year’s highest amount of gold imported into India. The figure rose to 121.8 tons. The total import figure for 2015 was 922.4 tons. As precious metals are priced in US dollars, import bills for India fluctuated according to the price of the dollar.
2011 saw the largest gold import bill, and 2015 saw the third-largest import bill in the past six years. It seems that lowered prices have encouraged investors to buy gold.
2016 is seeing gold recover from its 2015 losses, and the overall market sentiment for gold remains bullish. Gold’s recovery has also helped mining-based investments such as GoldCorp (GG), NewGold (NGD), and Gold Fields (GFI), which have risen 4.7%, 6.4%, and 31.4%, respectively, in the past trading month.
These three stocks together make up 13.5% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).
India and China, the two largest consumers of gold, make up about 50% of gold's global demand. Gold is treated more as a commodity in these two countries.
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