Kochi: Gold has nothing to do with the global slowdown. The fourth quarter of the last year, the worst affected phase of the economic downturn, led to an increased political and financial uncertainty. But not in the case of gold. The uncertainty led to a rise in personal demand for gold investment products in that period, the World Gold Council (WGC) has said.
 Together with a lower interest rate on currency assets, this made purchases of gold more attractive for small investors. It glowed. The investment was 8 per cent higher (110 tonnes) in the fourth quarter of 2001, in comparison to that of the year before, according to Gold Demand Trends, WGCs quarterly survey.
Japan on its own accounted for one-fifth of the global total (21.5 tonnes, a 54 per cent year-on-year growth), spurred by concerns over the countrys financial stability and imminent reductions in bank deposit insurance. Japans heavy investment buying continued into the early weeks of 2002.
The global jewellery demand, in contrast, was depressed at the beginning of the fourth quarter due to the general political uncertainties and the intensification of the global economic slowdown. But it recovered towards the end of the quarter when the political situation got stabilised and consumer confidence, thus, restored.
The early weakness left jewellery purchases at 767 tonnes 4 per cent below the exceptionally high levels reached in the fourth quarter of 2000, when the overall gold demand reached an all-time high. The overall gold demand in the fourth quarter, in the major markets tracked by WGC, was 877 tonnes 2 per cent below from what was recorded in the fourth quarter of 2000.
The gold demand in the year, as a whole, was dominated by the global economic slowdown and, later, the 11/9 incidents. The year began strongly, recording a 6-per cent year-on-year growth in the first quarter, but later weakened as the economic growth faded. The demand for jewellery, a major component, was badly affected because of a low consumer confidence and the reduction in tourist travel after the terror attacks all these factors outweighed the growth in investment buying.
 For 2001 as a whole, the gold demand was 3,235 tonnes just 2 per cent below that was recorded in 2000. Of this, 2,840 tonnes were accounted for by jewellery spending (down 2 per cent on 2000) and 395 tonnes by way of investment (up 4 per cent).
The demand in India, the worlds largest market, was unchanged from 2000 at 855 tonnes. After a very strong first half-year (purchases up 19 per cent), the demand was hit in the second half by a prolonged inauspicious period for gold buying and by the price volatility in September and October.
India posted a figure of 855.2 tonnes for 2001, unchanged from the record 2000 annual figure. There was a strong performance in the first half of the year when the gold demand, boosted among other factors by a good number of auspicious days for weddings in the Hindu calendar, was 19 per cent higher than in the first half of 2000.
This was counterbalanced by a weakness in the second half, caused by a number of factors including a prolonged period that was inauspicious for gold buying during September and early October, concerns over the economic slowdown and the volatility in the gold price following the terror attacks. The earthquake in Gujarat in January, too, affected the demand.
In the fourth quarter, the demand was 19 per cent lower than that of the previous years 185.1 tonnes. Despite the Diwali festival and the arrival of the wedding season in the fourth quarter, the price volatility and the fall in confidence discouraged even the traditional purchases of gold during this season.
A feature of 2001 was the sharp rise in official imports up 11 per cent year-on-year to 593.6 tonnes at the expense of unofficial imports, which fell sharply following the reduction in import duty announced in the budget at the end of February.
The outlook for the gold demand at the start of 2002 is more promising than the experience of the second half of 2001. There are many auspicious days for weddings in the Hindu calendar and the economic confidence is reviving, the WGC says.
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