Author: Paul Ploumis26 May 2015 Last updated at 05:48:29 GMT
NEW DELHI (Scrap Monster): According to Prithviraj Kothari, Vice President, India Bullion & Jewellers’ Association (IBJA), the country’s gold jewellery demand is expected to drop by as much as 30% during the second half of the year. The wedding season gold demand is likely to drop sharply as there are 40% less number of auspicious dates for weddings in H2 2015 as compared with the previous year.
IBJA notes that domestic gold market has already started showing signs of weakening gold demand. The jewellery sales in the country are expected to slow down from mid-June onwards. A below-normal monsoon season is feared to dampen rural gold buying activity during the second half of the year. As per estimates, rural demand accounts for nearly two-thirds of Indian gold demand.
According to Kothari, the Indian gold demand could drop significantly during 2015. IBJA forecasts the Indian gold demand for the year at 700 tonnes. This contradicts World Gold Council (WGC) gold demand estimates of nearly 900 tonnes to 1,000 tonnes for the entire year 2015. India’s gold demand had totaled 842.7 tonnes in 2014.
Meantime, reports indicate that duty-free gold imports from Indonesia under the Free Trade Agreement (FTA) have caused significant damage to domestic gold trade in India. Gold imported to India attracts 10% import duty. The higher landed cost of gold makes Indian gold jewellery more expensive when compared with imported jewellery.
Additionally, the government move to make PAN Card compulsory for all gold jewellery purchases exceeding Rs 1 lakh from June 1st onwards will badly hit rural gold demand. The retail gold sales are feared to be hit hardly the by government directive. The members belonging to All India Gems & Jewellery Trade Federation (GJF) have requested the Finance Minister to stretch the PAN card limit to Rs 5 lakhs, in order to ensure that domestic retail gold jewellery sales are nor jeopardized.