Losing glitter

India’s love affair with gold has hit a rough patch of late, resulting in a 39% year-on-year decline as consumer demand tanked to 204 tonne in Q2FY14. According to a World Gold Council report, global gold demand in the second quarter of FY14 declined by 16% to 964 tonne. Apart from India, the world’s largest gold consumer China also witnessed a year-on-year decline of 51%, with its demand for the second quarter of FY14 reported to be 208 tonne. The two Asian giants account for over a half of the 56% year-on-year decline in global bar and coin demand. The report blames the hangover from last year’s buying frenzy in China and elections and gold import restrictions in India for the slump. While the East showed a loss of appetite, the US demand for jewellery recorded its fifth consecutive quarter of year-on-year growth at 26 tonne. The UK’s jewellery demand for the first half of 2014 is 25% ahead of the same period last year but absolute volumes remain very low. Central banks, who have been steadily increasing their gold reserves since 2011, added another 118 tonne in the second quarter, marking a 28% increase since last year. With gold losing its market share in the technology sphere to copper and silver, the sector also recorded a 3% decline in demand. Will gold regain its lost glitter?