Gold demand in India was up 37 per cent during the June quarter to 167 tonnes against 122 tonnes logged in the same period last year, due to increase in jewellery purchase ahead of GST roll-out and lower base of last year.
Jewellery demand was up 41 per cent at 127 tonnes (90 tonnes in the year ago quarter) while in value terms, it increased 36 per cent at ₹33,000 crore, according to the World Gold Council’s quarterly gold demand trend report released on Thursday.
Gold price was up 13 per cent at ₹27,013 per 10 grams (₹23,903) as rupee depreciated amidst strong gold demand.
Gold recycling was up at 30 tonnes (24 tonnes).
Gold imports more than doubled to 248 tonnes (120 tonnes) as jewellers rushed to build inventory ahead of GST implementation.
The World Gold Council expects imports to come down in the second half of this year.
Reacting cautiously to the jump in gold demand, Somasundaram PR, Managing Director, World Gold Council, said despite underlying concerns on GST and other transparency measures taken by the government, positive sentiment returned with continued remonetisation and an expectation of good monsoon stoking up demand further.
The GST impact Towards the end of the June quarter, one of the biggest demand drivers was the GST rate on gold, which spurred consumers and traders to advance their gold purchases, he said.
“We believe gold demand to meet our full year demand expectations of 650-750 tonnes though the second half of this year will remain muted as the GST impact sinks in and people get used the country’s historic tax reform,” he added.
In fact, Somasundaram said, if enforced strictly, GST can reveal details on entire gold sales in the country at the touch of a button and with proper analytics, it can plug illegal trade and bring in the much-needed transparency.
Import duty high \
However, the government should lower the import duty from 10 per cent which is acting as an incentive for people to smuggle gold into the country.
Meanwhile, global gold demand declined by 10 per cent to 953 tonnes (1,056 tonnes) due to significant slowdown in Exchange Traded Fund inflow.