The demand for gold in India, one of the world’s largest consumers, is expected to improve following a normal monsoon and the government’s efforts to raise rural incomes, the World Gold Council (WGC) said.
“... improving macroeconomic indicators suggest a positive outlook for jewellery demand,” the WGC said. “Moreover, the Union Budget announced measures to boost rural incomes, including higher minimum support prices and an increase in agricultural credit.
“This bodes well for demand from the all-important rural sector, as does the forecast for a normal monsoon this year,” it said. Global gold consumption fell to the lowest level in 10 years in the first quarter of 2018 due to subdued gold prices that affected the overall demand and led to a fall in investment demand for gold bars and gold-backed exchange-traded funds (ETFs).
According to the latest WGC report, the first three months of 2018 saw the world gold demand pegged at 973 tonnes making it the lowest first quarter since 2008. While all major markets like India, China, Germany and the U.S. saw a dip in the demand for gold bars and coins in the first quarter, ETFs registered inflows for the fifth straight quarter but solely due to a growth in North America region.
The global demand at 973 tonnes was a decrease of 7% compared with 1,047 tonnes in the first quarter of 2017.
India demand dips
In India, the overall demand in the first quarter at 115.6 tonnes was lower by 12% compared with the year-earlier period. Jewellery demand dipped to the lowest in almost 10 years due to a rise in local gold prices.
“Government’s focus on unaccounted income continued to crimp this part of the market, with retail investors wary of heightened surveillance,” said the WGC report while referring to the fall in demand for bars and coins in India.
