Demonetisation impact: Gold demand drops to its 7-year low

Gold demand in India has dropped to a seven-year low in 2016 at 675.5 tonnes, which is 21.2 per cent lower than the previous year's figure of 857.2 tonnes.
 
As per reports, India's demand for gold is standing at its seven-year low. On the other hand, demand by value has also declined by 15 per cent to USD 27.2 billion in 2016 from USD 32 billion in the previous year.
 
It is considered that the steep decline in demand was caused due to several government initiatives to discourage consumers from buying gold. This includes strengthening the know your customer (KYC) rules by imposing a bar on anonymous cash purchase to Rs 2 lakh. The inclusion of PAN card, excise duty on jewellery and demonetisation has led to the commodity's demand go down.

On the other hand, global demand for gold has moved up about 2 per cent to 4,309 tones in 2016 from 4,216 tones in 2015 as the bourses witnessed a sharp increase in exchange traded fund (ETF) inflows. Gold is also considered as one of the safest lane to park investors cash during the uncertainty in US policies and Fed reviews, which kept the gold steady to positive during the last three months.
 
In the light of the series of uncertainties in US economic reforms and increased global demand, gold price may continue rise in the upcoming months. Hence, global investors would definitely keep an eye on this segment.