January 31, 2019 / 5:00 AM / 21 days ago

India's 2019 gold demand forecast at 750-850 T, election spending boost in view -WGC

* 850 T would be above 10-year average of 838 T - WGC

* 2018 demand fell 1.4 pct to 760.4 T - WGC

* National election effect to boost spending, demand - WGC

* Smuggled gold volume down to 90-95 T in 2018 - WGC

By Rajendra Jadhav

MUMBAI, Jan 31 (Reuters) - India’s gold demand could rebound in 2019, rising above the 10-year average, as the government seeks to bolster consumer confidence and spending power ahead of general elections due by May, the World Gold Council (WGC) said on Thursday.

Gold consumption in 2019 will likely be 750-850 tonnes versus 760.4 tonnes last year, said Somasundaram PR, the managing director of WGC’s Indian operations on Thursday. Indian demand has averaged 838 tonnes over the last 10 years.

A rise in consumption by the world’s second-biggest gold consumer would help global prices that are hovering near 8-month high, but could widen India’s trade deficit and put pressure on the rupee.

“This is an election year so it (the government) will put more money into hands of people,” Somasundaram said. “There will be a big amount of spending in a short span that would be good for gold.”

Before the election, Prime Minister Narendra Modi’s government could announces measures to help the nation’s farmers, the biggest buyers of gold, people with knowledge of the matter have said.

While overall gold consumption fell 1.4 percent last year, demand for coins and bars, known as investment demand, dropped 4 percent, the WGC said in a report published on Thursday.

India’s imports of gold dore rose 10 percent in 2018 from the year before to a record 275.9 tonnes as the import tax on the semi-pure alloy made by miners is 0.65 percent lower than on refined gold, Somasundaram said. The share of dore in India’s total imports is set to rise further in the longer term, he said.

Meanwhile, though gold smuggling in India has surged since India raised its import duty to 10 percent in August, 2013, Somasundaram said jewellery businesses have improved their organisational systems and smuggling dropped last year.

Around 90-95 tonnes of gold was smuggled into the country in 2018, down from 115-120 tonnes a year earlier, the WGC said. (Reporting by Rajendra Jadhav Editing by Kenneth Maxwell)

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