Strict regulations and changing tax regime in India has led to a decline in overall demand for gold globally.
India’s gold consumption is likely to further drop to its lowest in eight years in 2017, hit by government moves to make bullion trading more transparent, and by faltering demand from some rural areas, the World Gold Council (WGC) said on Thursday.
According to World Gold Council, global gold demand during the third quarter of 2017 slipped by 9% to 915 tonnes compared to the same period last year, an eight-year low, and fell by 12% year to date in 2017.
In India, after three consecutive quarters of growth, demand for gold jewellery fell by 25% year-on-year to 114.9 tonnes in the third quarter of 2017.
Evidence of weaker appetite in a country where gold is used in everything from investment to wedding gifts could drag on global prices that have been hovering near their highest in three weeks. India is the word’s No.2 consumer of gold behind China.
Indian demand is likely to be around 650 tonnes in 2017, compared to a 10-year average of 845 tonnes, Somasundaram PR, Managing Director of WGC’s India operations, told Reuters. Demand was 666.1 tonnes in 2016.