According to the World Gold Council (WGC), rural households in India allocate 7-8% of their annual savings to gold. Good harvests raise income levels and translate into greater gold demand. However, the opposite is also true. A worse-than-normal monsoon can negatively impact gold demand because it potentially reduces the amount of rural household savings. Lately, there has been a lot of speculation around a possible slowdown in Indian gold demand this year due to the weather phenomenon El Niño. However, we believe these concerns are overdone and we continue to forecast demand in India to be in the range of 900 to1,000 tonnes in 2015.
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