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Indian Gold Demand To Rise To Normal Level Within 3 Years - WGC

WGC sees gold demand in india normalizing in three years

(Kitco News) - It could take three years before gold demand rises to normal levels in India, according to the latest report from the World Gold Council.

Tuesday, the WGC said that they see demand in one of the world’s top gold-consuming nations rising by between 850 to 950 tonnes by 2020, on an improving economy and strong demographics. The optimistic report comes after a dismal 2016 with expectations that the country imported only 650 to 750 tonnes of gold, the lowest level since 2009.

Looking ahead, the council said that 2017 could be another difficult year as the market faces growing headwinds from uncertain government regulations.

“Any tightening in gold-related policies, such as the measures that have recently been implemented to regulate and formalize the gold industry, are disruptive and will stifle demand in the short to medium term,” the council said in its report.

While the country continues to transform its economy, reducing its burgeoning black market, it will provide some difficulties for gold, the WGC said; however, in the end, the market will be stronger with a more transparent economy.

“Transparency across the value chain is necessary for gold to be mainstream. This is a historic opportunity for the industry to redefine itself and emerge stronger, domestically and globally,” the WGC said.

Taking a long-term view, the council is optimistic that India will remain an important market for the yellow metal as the nation’s economy improves, growing the middle class.

The council noted that India has one of the fasted-growing middle class in the world and many consumers still have a strong cultural affinity for the yellow metal.

“Our analysis indicates that per capita income is one of the most significant factors underpinning gold demand and will increase over the coming years: the IMF expects growth of 35% from 2015 to 2020,” the WGC said. “Gold demand rises with income levels. For a 1% increase in income per capita gold demand rises by 1%.”

 

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

 

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