by Shivom Seth, Mineweb
June 24, 2013 (TSR) – With India’s apex bank stating there is `ample available evidence’ to suggest a moderation in gold imports appears to be underway in June, a new buyer has stepped in to snap up gold. China is set to overtake India as the precious metal’s biggest consumer, following the many restrictions plaguing Indian consumers.
With some 6.6 million brides in China set to receive gold at their weddings this year, weddings are turning out to be a multi-billion dollar business in China, for the gold industry.
“Some 10 million weddings take place every year in China. July has 14 auspicious marriage days for Chinese couples, all in one month alone,” said Manoj Khota, bullion trader, who caters to several Chinese citizens who live in Kolkata and Mumbai.
Stating that Chinese brides tend to go for gold and that most grooms shell out a bride-price and “then have to hand over several kilos of gold to get the bride to say yes,” Khota said, “The bride will also bring in a dowry from her parent’s side, which mostly constitutes gold ingots and gold jewellery.”
With heavy gold ornaments the norm at almost all marriages, China could well surge past India in its gold consumption given the latter’s many policy curbs.
The China Gold Association has said total demand in 2013 could be near 900 to 1,000 tonnes in China, surpassing demand from India. A top official told Bloomberg that some of the jewellery demand earmarked for festivals or weddings later in the year could have been brought ahead to April and May to take in the slide in gold prices.
Gold demand in China, the world’s largest consumer after India, has seen “more than an uptick” after surging in April, with consumers lining outside jewellery outlets at odd-hours of the day to take advantage of the price drop, say analysts.
“Bullion fell over 20% this year in the global market, though it has not had that much of a dramatic impact in India with the rupee constraints,” said Sandeep Asher, bullion analyst with a foreign brokerage house in Mumbai.
He added that the “Chinese people appear to be buying up gold bars by the dozen, since they are easy to trade. In the first four months of 2013, till April, consumption in China has already soared to 456.2 tonnes, which is an indication of the immense appetite.”
In the first three months of 2013, sales of gold bars surged 49% to 120.39 tonnes. Gold jewellery too jumped 16% to 178.59 tonnes.
Though India and China account for more than half of global demand, the world’s biggest buyer of gold is to levy a commodities transaction tax on futures contracts for precious metals, base metals and non-agricultural commodities, from July 1. This could further crimp demand in India.