India's gold demand grew in 2017 due to low prices, positive economic backdrop and improved consumer sentiment, according to a World Gold Council report
Mumbai: India’s gold demand grew by 9.1% to 727 tonnes in 2017 due to low prices coinciding with Dhanteras, positive economic backdrop and improved consumer sentiment especially in rural areas, according to a World Gold Council (WGC) report.
The total demand stood at 666.1 tonnes in 2016, WGC said in its latest Gold Demand Trends report. “The demand was mainly driven by jewellery, which grew as goods and services tax (GST) stabilised, stock markets performed well and GDP growth leading to better economy and consumer sentiment, particularly in the rural areas, as the effect of demonetisation wore off," WGC managing director, India, Somasundaram PR said.
Also, the government’s decision to remove anti-money laundering regulation, the Prevention of Money Laundering Act (PMLA), from jewellery helped boost demand. The growth was mainly driven by jewellery demand in 2017, which was up by 12% at 562.7 tonnes compared to 504.5 tonnes in 2016. In value terms jewellery demand was up 9% at Rs1,48,100 crore, from Rs1,36,290 crore in 2016. Total investment demand was down 2% at 164.2 tonnes in 2017 compared to 161.6 tonnes in 2016.
In value terms, gold investment demand fell by 1% at Rs43,220 crore, from Rs43,650 crore in 2016. Total gold recycled in India was 88.4 tonnes compared to 79.5 tonnes in 2016. Somasundaram said in next two years the growth percentage of coins is expected to be the fastest in India as the base is low.
Looking ahead, he said, 2018 Budget confirmed various positive initiatives for gold including the development of a comprehensive policy and the creation of a gold exchange. “As policy measures unfold, we are optimistic that demand for 2018 will stabilise at 700-800 tonne," he added. Talking about net import, he said, in 2017 it grew by 59% to 888 tonnes compared to 558 tonnes in 2016.
For the last quarter of 2017, demand for gold was up 2% at 249.3 tonnes compared to 244 tonnes in 2016. In value terms, gold demand during the fourth quarter went up by 3% to Rs66,220 crore against Rs64,530 crore in the year-ago quarter. Total jewellery demand was up by 4% at 189.6 tonnes against 182.2 tonnes in the fourth quarter of 2016. Value wise jewellery demand was Rs50,370 crore, a rise of 5% from Rs48,190 crore the last quarter of 2016. Total investment demand for the fourth quarter witnessed a decline of 3% at 59.6 tonnes compared with 61.8 tonnes in the same period of the previous year.
In value terms, gold investment demand was Rs15,850 crore, a drop of 3% from Rs16,340 crore in Q4 2016. Total gold recycled in India in the last quarter of 2017 was 17.6 tonnes compared to 16 tonnes in the same period of 2016.
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