It also said demonetisation will have a positive impact on the gold industry in the long run
India’s demonetisation drive has impacted gold demand in the short term but buying is showing signs of revival and post the presentation of the national budget on February 1, the market will be back to normal, says the India chief of World Gold Council.
“In November and December (during the demonetisation drive) certainly there was some impact. But people have started buying again. We hope soon after the, buying will normalise,” Somasundaram P.R., Managing Director, India, World Gold Council, told IANS in an interview.
He also said demonetisation will have a positive impact on the gold industry in the long run as it will curb grey market trades substantially. “Overall impact of demonetisation will be positive — industry will come under organised business. Of course the transition will take some time,” he said.
“Business during the demonetisation period was hurt as people were mostly busy exchanging old notes and genuine buyers stayed away, fearing they might come under the tax scanner.”
The World Gold Council (WGC) on Tuesday also launched the report titled “India’s Gold Market: evolution and innovation”, providing an overview of the industry in the last 15 years. The report also said demonetisation will have a significant impact on the economy in the short-term.
“Rumours over caps on gold holdings and buying added fuel to the fire. As tax authorities probed some jewellers who had immediately after demonetisation created opportunity to convert old notes currency for fake or back-dated sales, the resultant panic ensured that genuine gold buyers were reluctant even to buy wedding jewellery,” the report added.
The WGC had forecast India’s full year gold demand between 650-750 tonnes for 2016. Till the third quarter (July-September) of 2016 the demand was at 443 tonnes. It is forecast that India’s average gold demand will be 850-900 tonnes per annum by 2020..