Gold demand falls 29% in March quarter on new taxes, Re woes

The World Gold Council (WGC) expects Indian gold demand to fall to 800-900 tonnes in 2012 from 933 tonnes in 2011. With gold demand largely met through imports, this should benefit India’s current account, at the margin.

“Gold demand in India was affected in the quarter by a number of factors like a new tax on gold jewellery, increases in the import duty for gold and weakness and volatility in the rupee,” WGC said in a report. Jewellery demand fell 19 per cent to 152.0 tonnes in the same period of 2011. “Investment demand was down 46 per cent from the previous year at 55.6 tonnes. In May, the government withdrew the new tax on jewellery and the market is already responding positively,” WGC said.

Marcus Grubb, managing director, WGC, said, “China and India have seen continuing economic growth and whilst China’s economy is expected to slow, it will nonetheless surpass the rates of growth in the West. As we previously forecast it is likely that China will become the largest source of demand for gold in 2012.” This growth story also extends to other emerging market economies and is reinforced by

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