Gold recovers in fourth quarter results
The World Gold Council has reported that jewellery has reached the highest fourth quarter growth in 17 years and the Indian market also appears to have recovered from a challenging year with strong fourth quarter results.
In 2017, the demand for gold in India rose by 9.1 percent to 727 tonnes from 666 tonnes in 2016. For the first three financial quarters of last year, there was no end of reports on the struggling gold and jewellery industry in India with many manufacturers complaining about the Goods and Services Tax (GST) rates introduced in July, especially following demonetisation that took a heavy toll on the market in December 2016. The market appears to have recovered but there are mixed opinions about whether or not this will last.
The increase in gold jewellery sale sales has been attributed to pent-up demand as customers were not purchasing as much in the year’s previous quarters. Nitin Khandelwal, the Chairman of the Gems and Jewellery Federation also cited Dhanteras and Diwali festive jewellery demand as a reason for the quarter’s good performance.
The World Gold Council has reported softening of the yearly average gold prices by 1.22 percent and also attribute this to an increase in demand. “Wedding season has spurred more customers to buy and festive season demand has picked up... Even as ticket sizes have not risen significantly, the market has picked up,” said Jitendra Vummidi, the Team Leader for Vummidi Bangaru Jewellers.
There is, however, a fear that this recovery will not last. “Overall, we still see tepid demand,” stated N Ananthapadmanabhan, the Managing Director at NAC Jewellers. When this year’s first quarter results come in, it will be clearer whether this recovery has a solid basis or not.
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