India’s gold demand rose 9% in 2017 when global demand was at 8-year low: WGC report
Gold jewellery demand in India led the growth, up by 12% at 562.7 tonne in 2017 compared to 504.5 tonne in 2016.Updated: Feb 06, 2018 12:46 IST
India’s gold demand grew by 9.1% to 727 tonne 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. This happened when global demand for gold was at its lowest since 2009, as weaker fund investments outstripped a bump in jewellery consumption.
Global gold demand slid 7% in 2017 to 4,071.7 tonnes, an eight-year low, the WGC said in its latest quarterly demand trends report.
“In India, demand was mainly driven by jewellery, which grew as 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 India managing director Somasundaram PR told PTI.
Gold jewellery demand in 2017 was up by 12% at 562.7 tonne compared to 504.5 tonne in 2016. In value terms, jewellery demand was up 9% at Rs 1,48,100 crore, from Rs 1,36,290 crore in 2016.
Also, the government’s decision to remove anti-money laundering regulation, the Prevention of Money Laundering Act (PMLA), from jewellery helped boost demand.
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 Rs 43,220 crore, from Rs 43,650 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, the 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.
Globally, however, investment demand fell by nearly a quarter, driven by reduced inflows into bullion-backed exchange traded funds, the gold mining industry-funded WGC said. While gold prices rose last year on the back of dollar weakness, rising interest rates and a surge in stock markets detracted from the metal’s appeal as an investment.