India has seen a surge in gold demand in second half of 2015 but overall the year ended with total demand remaining stagnant. According to the report of gold demand trend for Q4 of 2015 and full year report released today. India's total demand for gold in 2015 was 848.9 tonnes compared to 842.7 tonnes in 2014. In value terms however due to lower price import bill has not seen any significant increase. It was around $35 billion.

In the calendar year ended December 2015, second half has seen a sharp surge in demand due to lower prices with total demand at 502.3 tonnes. However against this as per WGC data, total net bullion imports was 897.5 tonnes which was 769 tonnes in 2014. The rising import at a time when demand is stagnant represents some inventory with jewellers and fall in unofficial imports.

The demand trend report for 2015 released today also says that in the year China remained top gold consuming country keeping India second. China's total demand was 984. 5 tonnes against 813.6 tonnes in previous year. Traditionally India had been a top gold consumer but in 2013 and 2015 China remained at the tope while in 2014 India was number one consumer. In 2015 following depreciating currency in China especially in second half and crashing stocks consumers preferred to move back to gold.

Globally total gold demand in 2015 was virtually flat compared to 2014 at 4,212 tonnes said the council. Despite a challenging start to the year, gold demand rebounded in the second half of 2015 as a result of sustained buying from central banks and a strong second half from China and India.

This was particularly evident in the retail investment, where bar and coin purchases were led by China and Europe, with strong support from the US, as investors took advantage of weaker prices amid a softening economic backdrop, financial turbulence and ongoing geopolitical tension.

Global investment demand for the full year 2015 grew by 8% to 878 tonnes.

Overall jewellery demand for the full year 2015 was down 3% to 2,415 tonnes. Following a slower start to the year, "the third and fourth quarters combined produced the strongest second half-year total for gold jewellery in 11 years," said the report.

Central Bank demand for the full year 2015 saw a small uptick of 4 tonnes in 2015 to 588 tonnes as the need for further diversification was reinforced by a tumbling oil price and reduced confidence in the global economy. Central banks demand recovered in december quarter. It went up 25% to 167 tonnes, making this the 20th consecutive quarter of net purchasing.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said, "Looking ahead, physical demand will continue to be supported by strong central bank purchases, and continued buying of jewellery, bars and coins by households across the world, led by India and China. If we just look at the year to date, the investment case for gold is as strong as ever. While stock markets have wobbled, gold has performed well."

Total supply for the year experienced a drop of 4% to 4,258 tonnes due to lower recycling supply and most importantly mine production growth falling to its lowest level since 2008. Mine production contracted in Q4, the first quarterly contraction since 2008, as cost cutting took effect. In december quarter it substantially declined by 10% to 1,037t as primary production slowed as a result of weaker gold prices, mine closures and project delays.

Source:- www.business-standard.com