LONDON (Scrap Register): Weaker economic growth and the possible impact of higher gold price volatility may result in softer consumer demand this year, especially in emerging markets that make up the lion share of annual demand, the World Gold Council (WGC) said in its latest report.
WGC estimate that the recent announcement of a 2.5% increase to gold’s import duty by the Indian Ministry of Finance may result in a reduction to 2019 demand of approx. 2.4%.
In the Union budget 2019, the finance minister Nirmala Sitharaman proposed to increase custom duty on gold and other precious metals from 10% to 12.5%.
And that, if the higher levy were to become permanent, it could reduce long-term Indian consumer demand by slightly less than 1% per year, WGC said.
However, it added that the broad structural economic reforms being implemented in both India and China will likely support long-term gold demand.
“In addition, we expect central bank gold demand – led by emerging markets – to remain positive for the foreseeable future,” it said.