Mumbai : Gold demand in India — the world’s largest consumer — has been affected in the short-term because of the shock demonetisation, but long-term prospects are encouraging with consumption to average at 850-950 per annum by 2020, the World Gold Council (WGC) said on Tuesday.

While the main demand will be for jewellery, bar and coin investment is expected to be 250-300 tonnes by 2020. Jewellery exports are estimated to touch the $ 40 billion mark, from the current $ 8.6 billion.

Stating that transparency across the value chain is necessary for gold to be mainstream, WGC said gold trade will become more transparent with introduction of GST, mandatory hallmarking and a massive push by organised jewellers to promote non-cash payments. However, the latest cash ban exercise should also expand the tax base and the positive impact on public finances could generate a more benign and gold-supportive policy approach, it suggested. There has been short-term impact on gold demand in the country due to demonetisation as there were fears that the government may cap gold holdings and gold buying. Buyers stayed away for a brief while, said Somasundaram P R, head of WGC’s India operations, after unveiling the report titled India’s Gold Market — evolution and innovation. Since it is difficult to say right now how much of an impact the demonetisation move had on gold demand, WGC is still analysing it and will come out with a detailed report soon, he said. “As of now, we still maintain that overall gold demand will average at 650-750 tonnes in 2016. Definitely, demand will be at a lower range,” he said.

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