Business standards reports that gold jewellery demand in India is likely to bounce back with an estimate of 17 percent increase in 2017 after demonetisation.

In a latest study, India Ratings forecasts India’s gold jewellery demand is expected to be 600 tonnes in 2017. This is equivalent to the average demand of last five years.

Harsha Sodhani, analyst at India Ratings said “Jewellery demand remains robust, given India’s demographics and wedding-related purchases. Demand is likely to rebound to above a five-year average of 600 tonnes in 2017.”

For 2016, India’s gold demand had plunged 21 per cent (to 675.5 tonnes from 857.2 tonnes in the previous year). Of the total, 25 percent (161.5 tonnes) of demand was a result of investment demand.

Mr. Prithviraj Kothari, managing director, Riddi Siddhi Bullions said “The US economy has shown resilience in recent months, causing the dollar to strengthen, but gold has not lost its shine completely. Geo-political tension in the Ukraine, Syria, and the South China Sea has kept alive the safe-haven appeal of gold,”

Experts also said that investment demand for gold might be affected by an interest rate hike by the US Federal Reserve. US Fed Chair Janet Yellen has already hinted at an interest rate revision in March.

Mr. Mehul Choksi, Managing Director, Gitanjali Gems, said gold demand would bounce back due to investors’ interest in US gilts and the appreciation of the dollar against major currencies.

If we assume investment demand at 160 tonnes, almost the same as last year, India’s overall gold demand could very well touch 750 tonnes in 2017.

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