India’s gold demand for the third quarter of 2017 dropped 24% to 145.9 tonnes compared to 193 tonnes for the third quarter of last year. According to a report by the World Gold Council (WGC), the low demand has been attributed to the introduction of economic reforms such as Goods and Services Tax (GST) and anti-money laundering legislation (AML).
According to WGC India’s managing director Somasundaram, the introduction of GST and AML have affected retail sales as buyers stayed away from buying jewelries. He added that the decline in demand is primarily due to the transition to the GST and AML legislation. The festive season in the fourth quarter showed clear signs of growth, and this growth is supported by import growth ahead of demands and pricing in the market.
Gold jewelry demand for the third quarter declined 25% to 115 tonnes, while coin demand for the third quarter declined 23% to 31 tonnes. This decline could also be prompted by the advance buying trend witnessed in the second quarter to avoid the GST. In terms of value, gold demand declined 30% to Rs.38,540 crore for the third quarter of 2017 from Rs.55,390 crore for the third quarter of 2016.
In the worldwide market, gold demand slipped 3% to 478.7 tonnes for the third quarter of 2017, compared to 495.3 tonnes for the third quarter of 2016. Slow demand in the Indian market is said to be primary reason for this major decline. While India’s gold demand slipped 24%, China’s gold demand for the third quarter increased 13% to 159.3 tonnes.
Among the western industrialized nations, the United States posted strong demand for gold with 26.9 tonnes. Britain, on the other hand, had certain economic impact associated with its exit from the European Union. Its gold demand for the third quarter declined 5% to 4.6 tonnes.
India is one of the largest markets in the world when it comes to demand for gold. With the fourth quarter of 2017 already showing signs of recovery, the year 2018 is expected to have better demands.
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