Demonetization is expected to shave 300 tonnes off India's gold demand, which is unlikely to come back in a hurry.
Average monthly gold imports, which have been around 65-70 tonnes for the past few years, halved between February and September this year. In October and November there was a recovery on account of festive buying and the marriage season. However, demonetization is expected to result in a drop in demand.
Sudheesh Nambiath, lead analyst for precious metals demand in South Asia and the United Arab Emirates for GFMS-Thomson Reuters, said, "Our estimate is that 300 tonnes of gold demand, which were predominantly cash-based buying, will be shaved off in 2017."
Average annual gold demand for the past seven years has been 875 tonnes, and around 85-90 percent of this gold has been imported. Analysts said around 20 percent of the demand was met through smuggled gold. ...
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