Gold demand has shot up ahead of GST rollout, it seems. Data indicates the March quarter sales of gold could have gone up by more than 100 per cent compared to the last year quarter.
The imports touched 236 tonne in the March quarter, according to data from the precious metals agency GFMS. During the quarter, recycled gold too had come into the market. Hence, the market expects the demand to have gone up to 250 tonne. The industry expects this demand to be robust in the coming months as well.
“It is likely to go up above 250 tonne. In last year March quarter, the demand was considerably down due to the introduction of excise duty in the Budget and the strike thereafter,” said Bachhraj Bamalwa, past chairman, All-India Gems and Jewellery Trade Federation. As per World Gold Council data, March quarter last year came down to 116 tonnes.
Industry also finds that the expected GST rollout has already increased the demand for gold. “GST is being rolled out in July. We are seeing customers buying more of gold—both for investment as well as consumption—ahead of GST. In several overseas markets we have seen such an increase in gold demand ahead of changes in the tax regime— GST, VAT or introduction of any consumption tax,” said Sudheesh Nambiath, lead analyst, precious metals demand, GFMS South Asia & UAE. According to him, such increase in demand was reported earlier in Japan, Malaysia and Singapore ahead of GST.
“People are not sure about the tax rate for items like gold and jewellery. So they want to buy gold before the new tax regime sets in. The demand which had come down post-demonetisation, has recovered and we expect the demand to remain in the ongoing quarter as well or till the GST is rolled out,” said Nitin Khandelwal, chairman, GJF.
Jewellers are encouraging customers to close the purchases before GST kicks in as the tax being fixed below two per cent seems unlikely. In rural markets, good kharif and rabi crops have increased the demand for gold as farmers want their money to be converted into gold. “Many are using the extra income to make gold purchases,” added Nambiath. Many investors trust gold more than currency.
sangeethag@mydigitalfc.com