In a week where the gold price barely seemed to move, a lot of attention was focused on the possibility of India regaining its position as the world’s leading market.
A cranking up of import duty to 10% and a rule that 20% of imported gold must be re-exported again has hit demand in the country hard and seen it overtaken by China as number one.
Hopes are high that the new pro-business BJP government elected last week in India will start to reverse the policy, a hope that has been boosted by a tweak already to those allowed to import gold.
More companies will can now buy the metal from abroad, which traders said was a small step but one in the right direction.
India’s gold consumption fell by 26% in the first quarter of 2014 to just over 190 tonnes, according to the latest statistics from the World Gold Council, and comfortably behind China’s 278 tonnes, which fell 17%.
Even so, the World Gold Council remains upbeat on demand in India and expects it to pick up in the second half of the year, but if the government does decide to relax the rules it could be a strong final quarter.
Consumption is predicted at between 900-1,000 tonnes in 2014 but if policies change it could led to a “robust ” last three months said the gold trade body.
The WGC did express some caution over expecting too much too soon as India's widening trade deficit, one of the main reasons why curbs were imposed, has been falling in recent months due in part to the success of the gold policy.
The WGC also added it expects China to remain the number one market for a second year running with demand expected to be between 1,000-1,100 tonnes for the year.
One other trend noted by the council was the slowdown in sales through exchange traded funds (ETFs), one of the main reasons for 2013's sharp gold price decline.
The first quarter saw net reductions in ETF gold holdings of less than 1t, said the WGC.
“Outflows slowed sharply during January and reversed in February to generate a positive monthly inflow of around 12t, the first monthly increase in holdings since December 2012.
"This was largely due to a rise in geopolitical tensions with the unfolding crisis in the Ukraine raising gold’s profile as a risk diversifier, it added.
“March saw similar inflows, although towards the end of the month attention turned back to the US economic recovery and on the possible timing of interest rate rises.“
This week’s minutes from the latest meeting of US Federal Reserve interest rate setting committee confirmed that tightening of its monetary stimulus policies remains firmly in its mind, though gold investors took some comfort that Fed showed no intention of wanting to raise interest rates any earlier than previously indicated.
Spot gold was US$1,292 in early trading in US, almost the same as this time a week ago.