NEW DELHI: Gold Demand in 2017. PTI GRAPHICS (PTI2_6_2018_000138B)
NEW DELHI: Gold Demand in 2017. PTI GRAPHICS (PTI2_6_2018_000138B)

Mumbai : India’s gold demand grew by 9.1 per cent to 727 tonne in 2017 due to low prices coinciding with Dhanteras, positive economic backdrop and improved consumer sentiment especially in rural areas, according to a World Gold Council (WGC) report.

The total demand stood at 666.1 tonnes in 2016, WGC said in its latest Gold Demand Trends report.

“The demand was mainly driven by jewellery, which grew as GST stabilised, stock markets performed well and GDP growth leading to better economy and consumer sentiment, particularly in the rural areas, as the effect of demonetisation wore off,” WGC Managing Director, India, Somasundaram PR said.

However, the demand is likely to remain below its 10-year average for a third year in 2018 as higher taxes and new transparency rules on purchases may cap last year’s rebound in buying, WGC said.

Gold consumption in 2018 will likely be between 700 and 800 tonnes versus 727 tonnes last year, Somasundaram said. Indian demand has averaged 840 tonnes over the last 10 years.

Gold demand will lag because of a higher goods and services tax (GST) on bullion purchases imposed in 2017 and measures to track gold purchases, he said.

In New Dellhi, gold of 99.9 and 99.5 per cent purity rallied by Rs 330 each to Rs 31,600 and Rs 31,450 per 10 gram, a level last seen on November 9, 2016.

In Mumbai market, Standard gold climbed by Rs 195 to close at Rs 30,500 per 10 grams from Monday’s level of Rs 30,305.

Somasundaram said in next two years the growth percentage of coins is expected to be the fastest in India as the base is low.