Gold demand in India was affected in Q1 2012 by a number of factors; a new tax on gold jewellery, two increases in the import duty for gold and weakness and volatility in the rupee.
Jewellery demand fell 19% to 152.0t from Q1 2011. Investment demand was down 46% from the previous year at 55.6t. In May, the government withdrew the new tax on jewellery and the market is already responding positively, the WGC said in the press release.
On the counterpart, the demand in China's jewellery rose significantly accounting for 30% of global jewellery demand making China the largest jewellery market for the third consecutive quarter.
Demand for the quarter was underpinned by increased demand in China, continued central bank purchasing and inflows into exchange-traded funds (ETFs), the WGC added.