India’s Gold consumption reaches highest in last decade
India’s consumption of gold rose to 310 tonnes in the 2nd quarter and is the highest in the last 10 years despite the fact that government aims to restrict imports to control the Current Account Deficit (CAD). India depends on gold imports to meet its entire demand which is expected to be between 900 and 1000 tonnes in 2013 calendar year. Most of the demand was met by stocks that had been built up to healthy levels after the April price drop. Gold consumption was around 181.1 tonnes in the same quarter in 2012.
As per the World Gold Council (WGC), the consumer demand was up 71 % as compared to last year. The fall in the gold price last April resulted in an increase in jewellery demand by more than 50 % than what it was a year ago. Now, the government has raised import duty on gold for a third time in eight months from 8% to 10 % to control the CAD. The long term objective is to increase the liquidity of domestic gold holdings through institutional, official channels, effectively monetising gold to support economic growth.