Gold Sales In India Hit By GST, Anti-Money Laundering Law In Q3, says World Gold Council

Gold Sales In India Hit By GST Anti-Money Laundering Law In Q3 says World Gold Council

Gold sales in India has dropped in the third quarter of 2017 as a result of several new measures like the Goods & Services Tax (GST) and the anti-money laundering legislation (AML) being introduced.

Data released by the World Gold Council (WGC) this week showed that gold demand had dropped in India by 24 percent on a year-on-year basis to 146 tonnes.

The decline comes after the previous three quarters registering consecutive growth, with gold demand in Q3 2016 being recorded as 192.8 tonnes. In terms of value the demand in Q3 2017 was Rs 38,540 crore, a drop of 30 percent over same period previous year.

Jewellery demand was down 25 percent to 115 tonnes in Q3 as compared to the 2016 third quarter when it was 152.7 tonnes. By value the demand for jewellery was Rs 30,340 crores in Q3 this year a fall of 31 percent over Q3 2016 when it was Rs.43,880 crore. Demand for other forms of gold like bars and coins also fell, dropping by 23 percent to 31 tonnes this quarter.

World Gold Council Predicts Lower Demand For Full Year 2017

Somasundaram PR, Managing Director, India, WGC has attributed the fall in part to people buying in Q2 in advance, ahead of the GST rollout scheduled for Q3. He however noted that with industry’s shift to GST going as planned and the elimination of the AML rules, there were “clear signs of recovery in the last quarter.”

He also noted that the fall was underpinned by imports growing faster than demand, and pricing factors prevalent in the market.

According to WGC the gold demand for the whole year of 2017 is likely to be between 650 to 750 tonnes, much lower than the 5-year average for the country. It has indicated that the final demand was likely to be at the lower end of the provided range.

Fall In Demand Comes After Robust Growth In Previous Quarters

WGC data for the first three quarters of this year shows that the consumer demand for jewellery was recorded to be 349.9 tonne, a growth of 8 percent over previous year. Similarly Investment demand for gold was also up registering a 4.7 growth to hit 104.6 tonnes.

  • For the period between January and June this year, gold demand was up 30 percent in terms of volume to 298.4 tonnes whereas by value growth was 28.6 percent to reach Rs 43,600 crore. The gold demand in the first six months of 2016 was 229.4 tonnes valued at Rs 33,090 crore.
  • In the April-June quarter, volume growth in jewellery demand was 41 percent taking it to 126.7 tonnes while by value it grew by 36 percent to Rs 33,000 crore.

Gold purchases in other forms like bars, coins etc. was up by 21 percent in value terms this quarter.

  • Sources in the industry have estimated that gold sales during the Akshaya Tritiya festival that falls in the second quarter was higher this year, witnessing a record growth of 30 percent, which coincided with a decline in gold prices globally.
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