The gold price has been unremarkable of late. With prices languishing near the $1,200 level — marking a 3-month low for the yellow metal. 

But some positive news emerged this week for gold demand. With the world’s top consuming nation showing a big rebound in buying, which may be setting it up for one of the strongest years of demand in recent memory.

That’s in India. Where stats showed that gold imports during the first half of 2017 set a torrid pace.

During the first six months of the year, Indian buyers brought in a full 521 tonnes of gold. Marking a big increase from the same period a year ago — in fact, eclipsing the import total for the entire 2016 year, when just 510 tonnes of bullion was imported for the 12 months. 

That suggests imports for the whole of 2017 could come in above 1,000 tonnes. A feat that hasn’t happened in any of the last five years — with 2012 having been the highest total in that period, at 969 tonnes.

That’s encouraging for the global gold market. With Indian demand having a very disappointing year last year, partly because of a prolonged jewellers strike that saw gold sales completely crippled across the country.

Those issues are now resolved. And local sources say demand is coming back strong because of currently-lower gold prices, as well as a favorable farming season in India increasing rural gold consumption.

The relationship between direct buying like this and global prices isn’t always one-to-one. But a rise in Indian consumption should help support the gold market–and at least shows buyers feel the $1,200 level is a “good value”.

Watch for numbers on India’s imports over the coming months, with some uncertainty coming as new sales tax rules kick in across the country.

Here’s to bouncing back.

By Dave Forest