At a global level, the overall demand for gold jewellery in Q2’17 surged 8% year-on-year (y-o-y) to 480.8 tonnes, the report says.
The strong recovery, WGC believes, 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 goods and services tax (GST) rate announcement.
That apart, WGC also attributes the rise in gold jewellery demand to the festival of Akshaya Tritiya – a key gold-buying festival in the Hindu calendar. The timing of the festival this year, it says, falling over a weekend and coinciding with a dip in the gold prices saw sales rise nearly 30% y-o-y.
Given the implementation of GST, WGC expects the demand for gold jewellery to remain muted in the second half of CY17 (H2CY17).
Even though the 3% GST rate was lower-than-expectation, WGC expects the new tax to cause short-term disruption as manufacturers, retailers, importers and consumers adapt to the new regime.
"As consumers and importers brought forward their purchases to Q2, demand will likely be subdued for a few weeks. Stock is plentiful across the supply chain and consumers who have recently purchased are unlikely to do so again in the short term," WGC says.
Also Read: Gold import in second half set to slide
As the market digests this gold, and adapts to GST, the market environment should become more settled towards the end of the year. This, WGC says, should be helpful for gold demand – particularly as the key October festival season approaches.
|
GLOBAL VIEW |
|
|
Q2'16 |
Q2'17 |
% change (y-o-y) |
|
Gold demand |
1048.7 |
953.4 |
-10.0 |
|
Jewellery |
446.8 |
480.8 |
8.0 |
|
Technology |
80.1 |
81.3 |
2.0 |
|
Investment |
450.3 |
296.9 |
-34.0 |
|
Total bar and coin |
212.9 |
240.8 |
13.0 |
|
Gold-backed ETFs |
237.4 |
56.0 |
-76.0 |
|
Central banks & other inst. |
78.4 |
94.5 |
20.0 |
|
Source: World Gold Council report; demand in tonnes |
|
 "Gold, Jewelry, Shop, Sales")