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India’s gold demand plunges by 29% in Q1 of 2012

17 May 2012 Evaluate

India’s demand for gold plunged by 29% at 207.6 tonne in the first quarter of this year mainly on the back of new tax on gold jewellery, increased import duty and depreciating rupee, showed a World Gold Council (WGC) report. In terms of value, it declined by 3% at Rs 56,650 crore. The government’s proposed 1% excise, 4% custom duty hike, which was rolled back following the 21-day nationwide strike by retailers also played its part in affecting the demand.

WGC Managing Director, India and Middle East, Ajay Mitra, while releasing the report said, ‘the beginning of 2012 has been a challenging period for the Indian gold market. Despite all the challenges - price rise, economic slowdowns, rapid social change, gold retains its luster for consumers. We are optimistic that demand levels will normalize in the upcoming months as Indian consumers adjust to the new gold landscape.’

In the first quarter of 2011, the jewellery demand in volume terms also declined by 19% to 152 tonne. On the other hand, in value terms it increased by 10% y-o-y to a record high of Rs 41,480 crore. Further, in value terms, gold investment demand was at Rs 15,170 crore, a 27% y-o-y decline. Investment demand tonnage was down 46% at 55.6 tonne from the previous year.

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