5 Reasons Why Gold Demand Fell In Second Quarter

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India gold demand fell 20 per cent to 98 tonnes in the second quarter, impacted by rural incomes remaining under pressure, as well as the government's decision to increase excise duty.

Jewellery demand for H1 was the lowest since 2009 at just 186.3 tonnes. 

"Although Akshaya Tritiya sales provided a brief boost to demand in May, this was insufficient to prevent a severe Q2 contraction," WGC said in its latest report.

Here are some of the main 5 reasons why gold fell:

Excise Duty

The introduction of an additional 1 per cent excise duty was announced in the Union Budget and later it was withdrawn after opposition from the jewellery industry.

PAN Requirement

The requirement that purchases above Rs 200,000 need a Permanent Account Number (PAN) card have acted as headwinds to the industry.

Six Week strike

Consumers were unprepared for the huge jump in the gold price when the market re-opened after six weeks strike.

Gold above psychological

Gold prices rose above Rs 30,000 per 10g, which is a significant psychological barrier for Indian consumers and the highest domestic price for more than two and a half years.

Low Rural Income

Lower spending by rural Indians was another blow to demand as the rural population accounts for more than half of India's jewellery demand.

Read more about: gold, wgc
Story first published: Thursday, August 11, 2016, 13:18 [IST]
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