(FE)
Indian gold demand jumped 37% in volume term in the April-June quarter from a year earlier despite a 10% fall globally, thanks mainly to a favourable base, showed the World Gold Council (WGC). Fears of a high goods and services tax (GST) rate on gold also spurred consumers and traders to advance their purchases ahead of the GST roll-out, supporting demand during the June quarter. Domestic demand touched 167.4 tonne in the June quarter, against 122.1 tonne a year earlier, showed the data. Given that demand had risen 15% in the January-March quarter, the latest data signal a recovery after consumption hit a seven-year trough in 2016. However, despite the good growth rate, the June quarter demand remained lower than the five-year average of 202 tonne (for the same quarter). The sharp pace of the jump in the June quarter was greatly aided by the conducive base (Demand in the April-June quarter of 2016 had plunged following a strike by jewellers against the imposition of excise duty). The growth in domestic demand value during the June quarter also remains robust—37% in dollar and 32% in rupee terms. WGC managing director (India) Somasundaram PR told FE despite the latest jump, the council maintains its India demand forecast of 650-750 tonne for 2017, compared with 674 tonne a year earlier.
Growth will remain range-bound even with good monsoons, as consumers and trade adapt to the GST and the compliance regime, he said. However, in a slightly more optimistic tone than in the March quarter, the WGC said, the higher end of the 2017 demand range seems more likely now. Somasundaram said demand in the second half of the current calendar year will exceed 439 tonne witnessed a year earlier. However, it may still be lower than the five-year average (for the second half of a calendar year) of 465 tonne.
