Mumbai: India’s total gold demand fell to a seven-year low in 2016 as stringent government regulations, jewellers strike, higher prices and cash crunch on account of demonetisation impacted sentiments.
Interestingly, the scrapping of high denomination currency notes also impacted the amount of gold smuggled into the country through various unofficial channels.
According to World Gold Council (WGC), the total gold demand in 2016 fell to 675.5 tonnes, down 21.19 per cent from 857.2 tonnes in 2015.
“The Indian market faces a challenging time in 2017. We anticipate many of the headwinds that affected demand in 2016 to continue into this year, but we are confident that the government’s move towards a more transparent gold market will ensure that gold remains an important asset class for millions of people in India,” said Alistair Hewitt, head of market intelligence at the WGC.
It added that the steep drop in the gold price, which coincided with the festival of Dussehra, supported gold demand in the first two weeks of October. Lower prices also added lustre to the key gold buying occasion of Diwali.
Then came the demonetisation which hit the rural communities were hit the hardest but the effect is likely to be temporary, as per WGC.
