Gold & Silver

India's gold demand to rebound in 2020: WGC

Reuters MUMBAI | Updated on January 30, 2020 Published on January 30, 2020

File photo

It will be rebound from 3-year low

India's gold demand is expected to rebound in 2020 as the government seeks to bolster consumer confidence and spending power to revive Asia's third-biggest economy, the World Gold Council (WGC) said on Thursday.

A rise in consumption by the world's second-biggest gold buyer would further boost global prices, which scaled a near seven-year high earlier this month, but could widen India's trade deficit and pressure the rupee.

Gold consumption in 2020 will likely be 700-800 tonnes, compared with 690.4 tonnes last year, said Somasundaram PR, Managing Director, WGC's Indian operations. But government measures aimed at bringing transparency in bullion trading are likely to keep demand below the 10-year average of 843 tonnes, he said.

“We believe reforms that are going to be announced in the budget are likely to put more money in the hands of people. It will drive up consumption,” Somasundaram said. “Overall, as the economy improves it will have a rub-off effect on the jewellery industry.”

Finance Minister Nirmala Sitharaman, who will present the annual budget to parliament on Saturday, is widely expected to cut some personal tax in the 2020-21 budget, to spur consumer demand and investment.

December data

As Indian gold prices jumped 25 per cent in 2019, hitting a record high, consumption fell 9 per cent from the previous year to 690.4 tonnes, the lowest since 2016, the WGC said in a report published on Thursday.

Gold buying in the key December quarter dropped 18 per cent from a year earlier to an eight-year low of 194.3 tonnes.

Demand usually jumps in December quarters due to the wedding season and as Indians celebrate festivals such as Diwali, when buying bullion is considered auspicious.

The country's scrap supplies in 2019 jumped 37 per cent to 119.5 tonnes, helping New Delhi to bring down net bullion imports by 14 per cent to 646.8 tonnes, the WGC said.

New Delhi's move to increase import tax on gold to 12.5 per cent from 10 per cent in July lifted smuggling in India.

Around 115-120 tonnes of gold were smuggled into the country in 2019, up from 90-95 tonnes a year earlier, Somasundaram said.

“Unless import duty comes to a reasonable level no amount of reform is going to work,” he said.

India has been trying to bring transparency in bullion trading by curbing cash transactions and making hallmarking of jewellery and artefacts mandatory.

Published on January 30, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.