5 key reasons why India’s gold demand soared in 2017

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Published: February 6, 2018 3:39:04 PM

The 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.

 

Gold monetisation, a dream of the Modi government, didn’t find favour with the masses earlier.Backed by positive economic backdrop, and improved consumer sentiment, gold demand in India increased by 9.1 percent in 2017.

Backed by positive economic backdrop, and improved consumer sentiment, gold demand in India increased by 9.1 percent to 727 tonne last year., World Gold Council (WGC) report said. “The 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 Managing Director, India, Somasundaram PR told PTI. Here are the key reasons why gold demand went up in 2017:

1)Jewellery sales increased as GST stabilised.

2)Stock markets performed well.

3)Strong GDP growth leading to better economy and consumer sentiment

4)Waning away of demonetisation effect

5)Government’s decision to remove anti-money laundering regulation PMLA from jewellery

The growth was mainly driven by jewellery demand in 2017, which was up by 12 per cent at 562.7 tonne compared to 504.5 tonne in 2016. In value terms jewellery demand was up 9 percent at Rs 1,48,100 crore, from Rs 1,36,290 crore in 2016. Total investment demand was down 2 per cent at 164.2 tonnes in 2017 compared to 161.6 tonnes in 2016. In value terms, gold investment demand fell by 1 per cent at Rs 43,220 crore, from Rs 43,650 crore in 2016.

The jewellery sector although welcomed the budget 2018 focus on rural economy, it was disappointed that no announcement in terms of reduction of import duty was made. The government made some wonderful reforms for the agriculture and rural sector as this will empower rural sector which in turn will help the jewellery sales, All India Gems and Jewellery Trade Federation (GJF) Chairman Nitin Khandelwal told PTI. The proposed Gold Policy, Gold Spot Exchange and Gold Deposit Account should be very beneficial for the economy, said he. Finance Minister also made an announcement that ‘Gold Monetisation Scheme’ will be revamped, said GJF former chairman Sreedhar GV said.

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