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India’s Q3 gold demand falls by 24% due to GST, anti-money laundering norms: WGC

gold jewellery

New Delhi, Nov 9: Demand for gold in India for third quarter (July-September) 2017 was at 145.9 tonnes down 24 per cent against overall demand for the corresponding quarter last year, a World Gold Council (WGC) report revealed on Thursday.

In third quarter (July-September) 2016, the demand was 192.8 tonnes.

Somasundaram PR, Managing Director, India, WGC, said “India’s gold demand was down… as the newly introduced Goods & Services Tax (GST) and anti-money laundering legislation (AML) around jewellery retail transactions deterred gold buyers”.

“Post three consecutive quarters of growth, jewellery demand scaled down by 25 per cent to 115 tonne y-o-y in Q3 and bar and coin demand fell by 23 per cent to 31 tonne. The drop can be attributed partly to some advance buying in Q2 (April-June) to pre-empt the introduction of GST in Q3,” he asserted.

“However, with the industry’s gradual transition to GST proceeding on expected lines, and the removal of AML legislation, demand during the festive season seems to show clear signs of recovery in Q4. This is also underpinned by the faster growth in imports ahead of demand, and price factors in the market,” Somasundaram added.

Global gold demand in Q3 2017 was 915 tonnes, a drop of 9 per cent compared with the same period in 2016, according to the World Gold Council’s latest Gold Demand Trends report. This decline was led by two key factors: a softer quarter in the jewellery sector and significantly lower inflows into exchange-traded funds (ETFs).

Country’s Q3 2017 gold demand value was Rs 38,540 crore, fallen by 30 per cent in comparison to Q3 2016 (Rs 55,390 crore).

According to the report, total investment demand for Q3 2017 was down by 23 per cent at 31 tonnes against Q3 2016 (40.1 tonne).

Total gold recycled in India in Q3 2017 was 26.7 tonne, as compared to 25.7 tonne in Q3 last year.

In 2017, whole year market expectations of gold demand in India is in the range of 650-750 tonnes.

“Headwinds for demand continue though, following various measures since early 2016 to boost transparency, and therefore we expect full year demand in 2017 to be well below the 5-year average, our estimate being between 650 to 750 tonnes, the lower end of the range being more likely,” Somasundaram  further added.

Wefornews Bureau 

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