The relatively low price of gold and easier access to supplies, following the liberalisation process, have mainly contributed to the continued growth trend. Further, there was strong buying owing to the wedding and festival season during January and February. Around 90 per cent of official imports came through commercial banks which have imported 125.7 tonnes of gold under open general licence.

Though a majority of imports continued to be channelled via Dubai, more gold is now being imported directly from the UK and Switzerland. It may be recalled that the Reserve Bank of India had allowed banks to import gold on loan, suppliers' credit, unfixed price basis and consignment, thereby effectively allowing the banks to provide gold loans to the domesticmarket.

The other countries which have recorded a robust growth in the developing countries are the United Arab Emirates and Saudi Arabia with a respective growth of 50 per cent and 3 per cent. On the other hand, the developed countries maintained a stable growth rate in gold consumption. While the UK showed a growth of 41 per cent, the the demand of the US has gone up by 10 per cent.

According to a World Gold Council statement received here, the economic and currency crisis in some of the South Asian countries during the opening three months of the year triggered large scale sales of gold back to the market. This resulted in an unprecedented increase in supply of gold, with the result that the consumption of gold in the countries monitored by the council declined by 55 per cent to 342.1 tonnes during the period.

While the total demand for the period in the developed markets maintained the level of the first quarter of last year at 164.3 tonnes, the developing markets showed a decline of 70 per cent to177.8 tonnes. This was even while there was a continued robust demand in India, West Asia and Latin America, it pointed out.

Among the major reasons attributed to the decline included the government-sponsored gold collection campaign in South Korea, together with net sales from the private sector in Indonesia. Moved by a patriotic zeal, South Koreans sold gold amounting to 250 tonnes to help the country repay its huge loans from the IMF.