Gold trade expects 25 percent growth in second half of H2

By

Isabelle Crossley

Published
Jul 25, 2018

The gold market in India is expected to grow by 25 percent this year in the second half of H2 compared to H2 2017 due to rural growth and promising crops in rural areas.

Rural India accounts for 60 percent of the country’s total yearly gold consumption which stands at around 800 to 850 tonnes. The rural Indian economy is expected to do well during H2 as there has been a good amount of rain across the country and so crops are expected to do well giving rural consumers more spending money. Moreover, there has been a higher minimum support price (MSP) for Kharif (summer) crops which is also expected to aid the rural economy.

“There have been rains across the country which is good for Kharif crop production,” explained the All India Gem and Jewellery Trade Federation (GJF) Chairman, Nitin Khandelwal. “This also augurs well for the gold trade as we are expecting demand to pick up from August 15. If the crop is not damaged due to excessive rains, then we are expecting a 25% growth in gold demand in the second half of this year compared to the same period last year. Also, higher MSP will help increase the cash in hand among farmers.”

The first half of the year saw tepid gold demand but Khandelwal said that steady gold purchases are coming from middle class families for wedding purposes. The World Gold Council has also stated that the recent pullback in gold should see jewellery sales rise because this has traditionally been the case so this will be good news for Indian jewellers who have been struggling since the introduction of the goods and services tax (GST) a year ago.