India's this year Gold demand may drop to seven-year low

INDIA December 14 2016 11:08 AM

MUMBAI (Scrap Register): India’s gold demand picked up last month, but for full-year 2016 is on pace to be the weakest in seven years, said analysts at Commerzbank. 

According to Commerzbank, no positive impetus for gold demand can be expected from India in the near future after the Indian government declared most of the country’s cash to be no longer legal tender in early November. This was one reason why India imported large quantities of gold again last month.

They cite preliminary figures from the country’s Ministry of Finance showing imports totaled 111 tons, the highest this year. Having said that, they were 43% down year-on-year from January to November, said Commerzbank.

Gold imports are likely to slump in December, so Indian gold demand on a whole-year basis is well on its way to hitting a seven-year low.

However, lower demand from the world's second biggest consumer could hurt international spot gold prices that have risen a fifth so far in 2016, but help the South Asian country to reduce its trade deficit. Gold is one of India's biggest expenses on its import bill.