Gold demand in India jumped by 37 per cent to 167.4 tonnes during the second quarter of 2017, buoyed by seasonal demand and improved rural sentiment, the World Gold Council (WGC) said in a report.
The demand in the April-June last year stood at 122.1 tonnes, WGC said in its latest Gold Demand Trends report. In value terms also, the demand surged by 32 per cent at Rs 43,600 crore against Rs 33,090 crore in the Q2 2016.
"However, the second quarter demand is lower than the five-year average and is mainly driven by the anxiety on the Goods and Services Tax (GST) roll out, which led to advance purchase towards the end of quarter," WGC managing director, India, Somasundaram PR told PTI here.
The second quarter of 2016, was partially affected by the jewellers strike against one per cent excise duty on jewellery, he said.
The total jewellery demand in India during Q2 this year was up 41 per cent at 126.7 tonnes as compared to 89.8 tonnes in the same period of last year, the report said.
In value, jewellery demand grew by 36 per cent at Rs 33,000 crore against Rs 24,350 crore in the corresponding quarter of 2016.
The total investment demand was up 26 per cent at 40.7 tonnes against 32.3 tonnes in Q2 2016.
Similarly, in value terms, gold investment demand was recorded at Rs 10,610 crore, up 21 per cent from Rs 8,740 crore in the corresponding period last year.
The total gold recycled in India in the April-June period increased at 29.6 tonnes against 23.8 tonnes in Q2 last year.
"India's gold demand in Q2 2017 was a robust quarter as seasonal demand and improved rural sentiment contributing to the year-on-year increase. Both jewellery and investment demand saw a healthy rise despite a low base of Q2 2016," Somasundaram said.
Though underlying concerns about GST and other transparency measures continue, predictably, positive sentiment returned with continued remonetisation and an expectation of a good monsoon, he said.
This was evident in the sales momentum during 'Akshaya Tritiya', supported by a relatively higher number of auspicious wedding days during the quarter, he said.
"Looking ahead, in the second half of the year, as consumers and trade adapt to the new tax and compliance regime, growth will remain range bound even with good monsoons. Our full year demand estimate remains between 650 and 750 tonnes, the higher end of the range being more likely," Somasundaram said.
He said the outlook remains uncertain as to the growth of grey market as jewellers who are reluctant to move to the formal structure might find it easier to deal in cash. This in turn, he said, might boost the grey market, but slowly transparency will set in.