The demand for gold in India fell by 39 per cent in the first quarter of 2016 due to increase in duties and stricter disclosure norms, according to the World Gold Council (WGC).
According to the latest report by WGC titled ‘Gold Demand Trends,’ the demand for gold in India in the first quarter was 116.5 tonnes, 39 per cent lower than in the corresponding quarter of 2015 when it was 191.7 tonnes.
“The jewellers’ strike following the re-introduction of an excise duty, which left even wedding shoppers affected, was one major reason impacting demand,” said Somasundaram P.R., Managing Director, India,WGC.
“The sharp increase in the price of gold since the beginning of the year and an expectation of a cut in the customs duty on gold also led consumers to hold back on purchases. The regulation introduced ensuring PAN card details are disclosed for purchases above Rs.2 lakh is also reported to have affected buying,” he said.
In value terms, the demand was worth Rs.29,900 crore, a decline of 36 per cent in comparison to the first quarter of 2015 when the value was pegged at Rs.46,730 crore. The total jewellery demand during the quarter was down by 41 per cent at 88.4 tonnes.
Meanwhile, the global demand for the yellow metal during the first quarter of 2016 was pegged at 1,290 tonnes, an increase of 21 per cent compared to the year-earlier period. Incidentally, the aggregate demand in the three-month period between January and March made it the second-largest quarter on record, as per the report.
According to WGC, the rise in demand was driven by huge inflows into exchange-traded funds (ETFs), fuelled by investor concerns regarding economic fragility and an uncertain financial landscape.
The total inflow into ETFs during the period was 364 tonnes – the highest quarterly flow since the first quarter of 2009. In the corresponding quarter of 2015, ETF inflow was pegged at 26 tonnes.
Global demand for jewellery was down 19 per cent as higher prices along with industrial action in India and a softening Chinese economy led to many consumers delaying making purchases.
2015 Kashmir Despatch