KOCHI: The yellow metal scripted a curious tale in 2016. While gold demand in India registered a stupendous decline of 21 per cent at 675.5 tonnes, global gold demand grew by two per cent to 4,309 tonnes – the highest since 2013 – said World Gold Council (WGC). Jewellery demand in the country also witnessed a sharp decline of 22.4 per cent in 2016, at 514 tonnes compared to 662.3 tonnes in 2015. The global demand in 2015 was 4,216 tonnes.
“Due to demonetisation, the local demand was reduced drastically. Also, the curbs on accounted money impacted the overall jewellery purchase. There was a general feeling that gold and ornaments kept in homes might be under the taxman’s lens, which affected the gold market adversely,” said Hareesh V, research head at Geofin Comtrade. In value terms, jewellery demand saw a 12.3 per cent drop in 2016 at Rs 1,38,837.8 crore from Rs 1,58,310.4 crore in 2015, the WGC report noted.
“In China, the demand for bars and coins surged in the fourth quarter due to price dip in November and currency weakness also helped to boost overall investment demand by 70 per cent, to a four-year high of 1,561 tonnes,” the report said.
According to Surendran Koduvally, general secretary, All Kerala Gold and Silver Merchants Association, even though the WGC reports a 21 per cent decline in demand in 2016, the actual drop will be 10 per cent. “The reasons for the drop in demand are in routing money into other asset classes especially real estate, agriculture crisis in north India, reduce in purchasing power in South India due to crisis in GCC region.”