Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold continues to flow into India.
Gold imports into the country nearly tripled year-on-year in August. An estimated 60 tons of the yellow metal flowed into the Asian nation last month, up from 22.3 tons in August 2017. This continues a trend for the year. Over the first 8 months of 2017, India’s gold imports climbed to 617.5 tons, a 158% increase over 2016.
As a Reuters report notes, the Indian gold market has an impact on the broader world market.
Higher purchases by India, the world’s second biggest consumer, could support global prices, trading near their highest level in a year.’
The continued flow of gold into India demonstrates the resilience of the market in that country. On July 1, the Indian government replaced a labyrinth of taxes with a nationwide 3% Goods & Services Tax (GST). The World Gold Council called it the ‘biggest fiscal reform since India’s liberalization in the early 1990s.’ The WGC said the new tax structure would ultimately increase demand for gold in India, but analysts braced for a short-term dip in imports as the tax went into effect and the market adjusted to the new system.
This post was published at Schiffgold on SEPTEMBER 18, 2017.