China beats India in gold purchase

Mumbai

Sept. 6: India has lost its position as the largest gold consumer to China. During the first half of 2009, the gold consumption in India was down by 35 per cent at 122.7 tonnes compared with 189.1 tonnes during the first half of 2008
While during the period, the gold consumption in China rose by four per cent at 161.6 tonnes against 155.3 tonnes during the same period in 2008.
Ms Monica Bonar, an analyst of Fitch Ratings, said: “Traditionally, India has been the largest gold consumer but the high gold prices resulted in consumers choosing to exchange or sell old jewellery rather than make fresh purchases. Along with India, the demand from all other major gold consumers like the Middle East, Turkey and the US has fallen in the range of 20 to 50 per cent during the first half of 2009.” Due to the declining Indian gold demand, China has become the largest consumer of gold, she added.
Added, Mr Suresh Hundia, the president of Bombay Bullion Association, “In the last four years, China has stocked more than 1,000 tonnes of the gold. On the other hand, due to the rising prices the Indian demand is declining. In spite of the subdued demand, the gold prices in India are expected to stay firm on the strong global cues.”
Mentioning that China is stocking many commodities like gold, metals and crude oil, Mr Pramit Brahmbhatt, the CEO of Alpari India said: “Taking advantage of the huge domestic demand, China is playing up with the market. Though it’s unpredictable what China will do, it is in a position to boost prices of commodities by huge buying or they may even sell the commodities that would cause a correction in the commodity prices. Apart from China, the other global institutional investors would offload gold stocks to invest in other asset classes if the world economy recovers. That would resurrect the gold prices in the medium term.”