GST fear drove gold demand up in May


AHMEDABAD: Scared of higher taxes under the imminent goods and services tax (GST) regime, people seem to be advancing their purchases of gold jewellery, and consequently, gold imports reached a six-month high in May, 75% higher than in April, when 7.39 metric tonnes of gold was imported to Gujarat. In May, gold imports went up to 12.95 metric tonnes.

Gold imports through May are driven almost exclusively by gold jewellery purchases and not bullion imports. “Gold prices are declining and therefore investors are not actively investing in gold of late,” said a city-based bullion trader.

Pointing at fear of higher prices under GST as the reason for the jump in gold jewellery sales, Jigar Soni, a city-based jeweller said, “Along with the service industry, there is fear of 18% GST being imposed on making charges of jewellery, and customers are investing in gold, before prices rise.”

“The ongoing wedding season has contributed much to our sales,” said Soni.

Apart from weddings that are scheduled within a month or so, people are also making gold jewellery purchases for weddings that are scheduled from December to February.
“Several of our customers have their weddings scheduled in winter, yet, they want to take advantage of the current prices, fearing a jump in prices following GST implementation,” said Manoj Soni, a city-based jeweller.

“We have advance orders for wedding jewellery. Moreover, gold prices have settled around Rs 29,000 per 10 gram, and after GST implementation, and as demand picks up in the coming few months, the prices are likely to shoot up,” he added.


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