World Gold Council says India’s gold sales slid amidst rising global demand

India's gold demand plunged sharply in the March 2016 quarter, mainly due to the 19 day strike by the country's jewelers after 1% excise duty was reintroduced. The demand was down 39.2% from 191.7 to 116.5 tonnes in the corresponding time last year according to World Gold Council (WGC) data published today.

The jewellery segment slid 41% from 150.8 to 88.4 tonnes, and hit a seven-year low. The report suggests the sharp rise in the local gold prices had a discouraging effect. Budget 2016 has also been mentioned as one of the factors.

“In it the government proposed not only an increase in both custom and excise duties on doré (from 8% to 8.75% and from 9% to 9.5% respectively), but also — crucially — a 1% tax to be levied on jewellery manufacturing," the report reads.

The WGC report also says demand for gold grew 21% globally at 1,290 tonnes. The reasons were cited as "huge inflows into exchange traded funds (ETFs), fuelled by investor concerns regarding economic fragility and an uncertain financial landscape."

Interestingly, while the demand for gold was on the rise, the demand in the jewellery segment dropped 19% year-on-year, and that’s mainly because the world’s two biggest spenders on gold India and China tightened their purse-strings.

However, there’s some good news for jewelers too. The report predicted that demand is expected to pick up in the June quarter.

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