Higher gold prices and subdued financing environment are likely to weaken growth in demand of jewellery by 2-4 percent during 2018, ICRA report said.
Higher gold prices and subdued financing environment are likely to weaken growth in demand of jewellery by 2-4 percent during 2018, a credit rating agency report said. However, the scenario may change in the medium to long term. The demand growth may improve on account of rural demand, wedding seasons and rising disposable income. “The agency expects the jewellery demand growth to weaken by 2-4 percent for CY2018 (Calendar year 2018), owing to higher gold prices and subdued financing environment. The industry continues to remain susceptible to the regulatory risks, which has affected both demand and supply,” ICRA said.
The report also said that growth of 7-8 percent will be witnessed in the industry revenues due to socio-economic and cultural factors that are unique to the Indian market, the ICRA report said. The demand for gold jewellery grew by 12 percent in volumes and 9 percent in value in the calendar year 2017, as per the report, amid reports of increased tax rates post GST and inclusion of jewellery sector under Prevention of Money Laundering Act (PMLA).
“Demand is likely to be affected by 2-4 per cent in 2018. Prices of the yellow metal have increased steadily in the last three months, which coupled with lesser number of auspicious days, impacted jewellery demand. Also, financing to the gems and jewellery sector have been under increased scrutiny in the recent months following reporting of fraud by few lenders on their exposures to the sector,” PTI reported citing K Srikumar, vice-president, ICRA.
World Gold Council report
During the January-March period this year, the gold demand globally declined by 7 percent to 973 tonne in comparison to the same period last year mainly due to a decline in investment demand, according to the World Gold Council (WGC). The overall demand for gold stood at 1,047 tonne in the first quarter of 2017, WGC said in its ‘Gold Demand Trends’ report for Q1 2018.