Last year, India was the top consumer of gold bullions, bars, jewelry, and coins removing China from the lead.
Thomson Reuter’s GFMS most recent study on global supply and demand for gold discovered slipping demand in China which overtook India three years ago.
The GFMS report pointed out that demand for Chinese gold demand plunged by more than one-third to a four-year low of 866 tons while supply of scrap gold increased to 182 tons.
Slow economic growth and the fight against corruption is said to be responsible for reducing jewelry demand in China to 608 tons. This is 33 percent below 2013 levels. Orders for gold bars declined 53 percent to 171 tons which is a five-year slump.
Meanwhile, data from the US Geological Survey indicates 32 percent of the country’s gold exports during the third quarter of 2014 were transported to China instead of Hong Kong.
In India, demand for jewelry in 2014 increased by 14 percent to an unsurpassed 690 tons and put India ahead of China as number one customer of gold jewelry worldwide.
The GFMS report also found out that there is currently an oversupply of gold in the international market. This condition is expected to persist because of additional liquidations from gold Exchange Traded Funds. Meanwhile, gold mine production also increased in 2014 with majority of big gold mines presently on stream.
Mining firms have turned to net gold hedging which was almost 42 tons last year. GFMS predicts that gold price average of $1,125 per ounce during the second quarter will go up to $1,160 at the middle of the year.