India’s gold demand declined by 28 per cent to 194.8 tonnes in the third quarter this year mainly due to higher prices, not so recovered rural wallet and regulatory changes, World Gold Council’s said in its latest report.
The overall demand stood at 271.1 tonnes during the third quarter of 2015, according to the WGC’s latest ‘Q3 2016 Gold Demand Trends’ report.
“The growth in demand during Q3 of 2015 was one of the highest and was unprecedented as the price had dropped to Rs 25,586 per 10 grams,” WGC MD, India, Somasundaram PR told news agencies.
In value terms, gold demand dropped 12 per cent to Rs 55,970 crore in July-September quarter from Rs 63,660 crore in the same period last year.
Although demand among the rural population was softer than expected, given the improved monsoon rainfall this year, it was relatively resilient compared to the demand in urban areas, it said.
“While an elevated price level has been an obvious factor for the drop in volume, other issues appear to have had an impact on demand – like the trade strike following the introduction of excise duty, the regulation on PAN card for purchases above Rs 2 lakh and the subdued sentiment on gold buying when the income disclosure scheme was running,” Somasundaram said.
Besides, unusual discounts on prices in the unorganised bullion segments caused further disruption to official trade channels, he added.
He said good monsoon and a drop in the price ahead of Diwali augur well for strong seasonal demand in Q4 that will likely restore the demand trajectory to normal levels.
“Further, as tax compliance moves under the GST framework with a more reasonable duty and tax on gold, we can expect growth in organised trade activity. As global factors are supportive of gold, consumer acceptance of the price levels will further sustain demand,” he said.
The demand for the full year is expected to be in the range of 650-750 tonnes, he further said.