GST Fears Drive Up India's Q2 Gold Jewellery Demand

GST Fears Drive Up India’s Q2 Gold Jewellery Demand India drove global Q2 jewellery demand growth almost single-handedly, according to the World Gold Council’s (WGC’s) latest Gold Demand Trends report. Indian gold jewellery demand shot up 41% to 126.7 tonnes compared with just 89.8 tonnes in Q2 2016.

The WGC said the strong recovery had been widely expected after exceptional import figures were reported, hitting an all-time high of 104.6 tonnes in May as the market stockpiled gold ahead of the June GST rate announcement. Expecting a punitive GST rate, jewellers and consumers alike crammed their purchases into the first two months of the quarter, slowing down once the government confirmed that a 3% rate would be applied. Another brief flurry at the end of June, before the roll out of GST in July, pushed local prices to a premium of around $3-4/oz above the international price, although some traders reported paying a premium as high as $10/oz in some instances.

Demand was boosted by festivals, weddings and improved rural sentiment. Akshaya Tritiya – a key gold-buying festival in the Hindu calendar – boosted gold jewellery demand in the usual way. But the timing of the festival this year, falling as it did over a weekend and coinciding with a dip in the gold price, proved particularly encouraging. Estimates suggest that Akshaya Tritiya-related sales were up by around 30% year-over-year.