In a statement, Somasundaram P.R., Managing Director, India, World Gold Council, has said that the gold demand in India will bounce back after the budget. He said that gold demand had been affected due to demonetization, but now it is showing signs of revival.
He was also confident that demonetization will have a positive impact on the gold industry in the long run, even though things have not been so good in the short term. His reasoning is that demonetization will help curb the gray market and make the gold industry more organized. This may take some time, but eventually it will happen, he said.
The World Gold Council also presented its report titled “India’s Gold Market: evolution and innovation”. The report provides an overview of the country’s gold industry, as it has progressed during the last 15 years. The report states that the fear of being questioned by Income Tax authorities was also one of the reasons that prevented genuine buyers from buying gold post demonetization.
The report further talks about the industry, pointing out that 90% of the country’s gold retailers were ‘unorganized’ in the year 2000. It projects that the share or ‘organized’ gold market will increase to 35-40 percent by 2020.
Another interesting finding mentioned in the report is that income plays a more important role in determining demand for gold, as compared to price.