Monday, 20th June 2005 (2717 views)

India looks set to retain its position as the world's biggest market for gold, despite the challenge presented by China in recent years.

With a projected gold consumption of 700 tonnes for 2005, an increase of 11 per cent on figures for 2004, India is expected to continue to easily beat China's 234 tonnes consumed in 2004.

Aspects of traditional Indian society will continue to see the country maintain its market-leading status, Dow Jones reports.

A cultural affinity with the metal, which represents wealth and is often used in wedding dowries to a groom's family, is one aspect specific to Indian society. Gold jewellery is the main gold use in India, with 99 per cent of imported gold being made into jewellery.

"China doesn't have India's practice of giving dowry to the groom's family...[The dowry system] can hardly be exported to help gold demand elsewhere," said Andrew Smith, analyst with Mitsui Bussan.

Gold is also considered financial collateral in a mainly rural economy where banks have not achieved comprehensive penetration, according to analysts.

The total gold held by individuals in India is believed to weigh a combined 13,000 tonnes.

 

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