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The World Gold Council (WGC) would soon submit a blueprint to the government on spot exchanges, its managing director for India operations said. “We have given a blueprint as a steering committee, we have drafted it and it is in the final stages, we will be releasing it very shortly,” said Mr. Somasundaram PR, managing director-India, WGC at ASSOCHAM International Gold Summit.
He added, “This steering committee which has got all trade associations, key international banks, and bullion banks and it was led by us, has been working on the spot exchange blueprint for last six-seven months, we have just now finalized what the spot exchange should be and we will be releasing that both to the government, policymakers, and others.”
Highlighting that demand for gold is likely to remain subdued in the current calendar year, Mr. Somasundarm said that while the demand for gold in the first half was seven percent down compared to last year, the WGC expects it to pick up in the second half. “But it will still be another very subdued year for demand, we expect the demand to be 700-800 tonnes.”
He further said, “There is no specific catalyst to drive the demand up, while the international gold price has come down by 8-10 percent, Indian price has gone up by 13-14 percent, GST (Goods and Services Tax) is also causing a lot of transition.”
Mr. Somasundaram, also said that reforms like GST and demonetization have actually led to gold buying becoming a lot more organized, more so as the grey market is also becoming weak, thus it is a good time for gold to become mainstream because of demand remaining subdued.
He said that considering gold demand is influenced more by an increase in income, the WGC expects that demand for gold will slowly go back, by 2020 to 800-900 tonnes.
Mr. Somasundaram also said that government should refrain from imposing any restriction on gold as the market is very subdued right now. “The CAD is pure because of oil and the rupee depreciation is because equity market money is going out, it has nothing to do with people buying gold.”
He said, “We hope that such curbs do not happen now because it will lead to grey market developing, it will actually then make all the work done on policy in the last two years, it will derail all the reforms that are actually now being planned.”
Mr. Somasundaram said that it is imperative to step up transparency measures to make gold transactions traceable, besides there is also a need for infrastructure and bullion banking for gold to become an asset class.