GST, other such policies to boost gold demand, says World Gold Council

Gold demand will get a fillip from government policies targeted at transparency and economic growth, according to the World Gold Council.

"In India, the second largest gold market in the world, we believe that after their initial implementation shock, policies such as the demonetisation initiative and the new Goods and Service Tax (GST) will start to have a positive effect on the economy," WGC said in its 'Outlook 2018 Global economic trends and their impact on gold' report.

It said, these policies are designed to improve transparency, broaden the tax base, and draw the informal, cash-based economy into the formal sector.

"Our research shows that continued economic growth underpins gold demand. As incomes rise, demand for gold jewellery and gold-containing technology, such as smart phones and tablets rises," it added.

Income growth also spurs savings, helping increase demand for gold bars and coins.

Meanwhile, the report further said, global growth increased in 2017 and the market expects the trend to continue in 2018 as well.

With the European and US economies expanding, coupled with decreasing unemployment in recent years, there has been a rise in wages yet inflation indices are low, it said.

Households and businesses are rebuilding their finances and are optimistic about the future, it added.

The report said it expects China's economy to continue growing, but the nature of growth is changing from investment-driven growth to a consumption-led model.

"This could affect the economic growth rate, but even if the Chinese economy grows at a slower rate than in the past, we see a more balanced model, aided by further global integration through its One Belt One Road initiative supporting a sustainable growth trajectory," it added.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel