India’s Gold Demand Drops 28 Per Cent On The Back Of Targeted Government Policies

The demand for gold in India has gone down by 28 per cent at 195 tonnes (271 tonnes) on the back of high prices and government policies. Recently, the government charged an excise duty of 1 per cent on gold jewellery besides making PAN card disclosure mandatory for purchase of gold priced over two lakh.

The gold demand estimate for this year has been reviewed downhill by the World Gold Council to 650-700 tonnes from 750-800 tonnes, given the weak demand of 441 tonnes in the last three quarters this year. Gold prices in the September quarter was up by 22 per cent to Rs 28,734 per 10g, which pulled the demand down.

Somasundaram PR, Managing Director (India) of World Gold Council, said the government’s Gold Bond Scheme is mainly an urban phenomenon, driven by people investing in stock markets. So it may not impact physical gold demand this early. Regarding the goods and services tax, Somasundaram said the high rate of taxes would only encourage unofficial sourcing of gold.