Gold demand hits seven year low in third quarter

CHENNAI: Gold demand plummeted to a seven-year low in the July-September quarter at 146 tonnes, down by 24 per cent in comparison to the same period in 2016. Data from the World Gold Council (WGC) shows that this latest fall in demand comes after three consecutive quarters of growth. Also, the 146-tonne figure is the lowest for the period in this decade.

Jewellers attribute the fall to the introduction of the Prevention of Money Laundering Act (PMLA) that impacted consumer sentiment. "It was on for almost 50 days and it hit sentiments, leading to a 35 per cent drop in purchases. Even as the Act is not in effect now, sentiments have not improved. This can be attributed to the GST impacting businesses. Buying jewellery becomes the last resort and the sale has been down since, barring the few days surrounding Diwali," said NAC Jewellers MD N Anantha Padmanabhan.

The WGC makes a conservative estimate of the total annual demand, placing them at 650-750 tonnes, leaning towards the lower end. WGC India MD P R Somasundaram said, "While initially we had estimated the annual demand to hit 750 tonnes, lower than the average of 845 tonnes, we are further revising the estimate to be 650 tonnes."

Gems and Jewellery Federation (GJF) adds that frequent changes in policy , demonetisation and GST have dampened sentiments. GJF chairman Nitin Khandelwal said, "There have been changes in the policy in the last 15 months - starting with the mandatory declaration of PAN, demonetisation, PMLA and GST.Besides, there is a softness in the income owing to poor yield of staple crops such as soyabean and cotton."