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India Boosts Global Gold Jewelry Demand
May 8, 2017 8:45 AM
By Rapaport News
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RAPAPORT... Global gold-jewelry demand increased in the first quarter, driven by a reawakening in India, the World Gold Council (WGC) said in its quarterly report on
gold trends.
Overall demand for gold jewelry advanced 5% to $18.85 billion, and by volume it crept
up 1% to 480.9 tonnes.
However, the market was weak compared with the last half-decade, with demand by volume falling 18% below the five-year
average of 587.7 tonnes, the WGC cautioned. The drop in demand was impacted by
a 9% rise in the metal’s price between December and March, the council explained.
“Jewelry demand is still in the doldrums, although there
are signs of improvement, especially from India, where the gradual remonetization
of the economy is supporting the jewelry market,” said Alistair Hewitt, the
WGC’s head of market intelligence.
Demand in India jumped 19% to $3.62 billion, with volumes
up 16% to 92.3 tonnes. The country’s gold trade benefited from pent-up demand as
consumers stopped buying during the liquidity crunch toward the end of 2016,
the WGC explained. The Indian government’s demonetization policy in November
removed 86% of currency from the market, slashing many consumers’ buying power
and denting jewelry sales.
Despite the improvement, the WGC remained cautious about
India for the rest of the year because of uncertainty over whether the nation’s
goods and services tax (GST) would result in higher or lower taxes for the
jewelry sector.
“The combination of the wedding season, the Akshaya Tritiya
festival falling on April 28 and 29, and continued remonetization of India’s
economy should support gold jewelry demand,” the report said. “However, the
market is wary of the forthcoming decision on GST, and this will likely weigh
on demand until the government’s final decision, due for implementation in
early July.”
China continued to rank as the largest market for gold
jewelry. Demand there rose 2% to $6.92 billion, even as volumes declined 2% to 176.5
tonnes.
Meanwhile, overall gold demand – including for jewelry, investment
bars and coins, technology and central banks – fell 18% to 1,034 tonnes as
higher prices weighed on the metal's investment appeal.
Image: GJEPC
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Tags:
Akshaya Tritiya, Alistair Hewitt, China, Demonetization, gold, Gold demand, Gold jewelry, goods and services tax, GST, India, Jewelry demand, Rapaport News, WGC, World Gold Council
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