Gold demand hits eight-year low in July-Sept: WSG report
Strict regulations and changing tax regime in India led to a decline in overall demand for gold globally. According to World Gold Council, global gold demand during the third quarter of 2017 slipped by 9% to 915 tonnes compared to the same period last year, an eight-year low, and fell by 12% so far in 2017. The gold demand trends report said that the fall was due to weak demand in jewellery sector and significantly lower inflows into exchange-traded funds (ETFs).
“A weak quarter in India was the main reason for year-on-year decline in global demand. The new goods and service tax (GST) regime deterred consumers, as did new anti-money laundering regulations governing jewellery retail transactions,” said the report released on November 9.
Demand for gold in India for three months ending September was at 145.9 tonnes down by 24% as compared to demand in Q3 2016 at 192.8 tonnes. In India, after three consecutive quarters of growth, demand for gold jewellery fell by 25% year-on-year to 114.9 tonnes in the third quarter of 2017.
It said that recovery in Indian jewellery demand in the first half of 2017 was derailed in July-Sep-
MUMBAI:
tember due to implementation of GST in July, followed by a further blow when the government brought the gems and jewellery industry under the umbrella of the Prevention of Money Laundering Act (PMLA) in late August.
Demand, therefore, remained under pressure, particularly in rural India. However, consumer sentiment improved after PMLA was lifted from gems and jewellery sector in early October ahead of Diwali, but festive demand did not pick up due to GST constraints.
Somasundaram PR, MD, India, World Gold Council said, “Headwinds for demand continue though, following measures since early 2016 to boost transparency, and therefore we expect full year demand in 2017 to be well below five-year average, our estimate being between 650 to 750 tonnes, the lower end of the range being more likely.”
Meanwhile, investment demand for gold was down 28% year-on-year at 241.2 tonnes as ETF inflows slowed sharply from the 2016 levels.
Demand for gold from other sectors consolidated as central bank demand was healthy in Q3, up 25% year-on-year to 111 tonnes, while bar and coin investment strengthened by 17% to 222 tonnes, albeit from a low base.