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Gold demand will get boost from GST, other such policies: WGC
Jan-17-2018

The World Gold Council (WGC) in its report titled 'Outlook 2018 Global economic trends and their impact on gold' has stated that gold demand will get a boost from government policies targeted at transparency and gross domestic product (GDP) growth. It believed that in India, the second largest gold market in the world, after their initial implementation shock, policies such as the demonetisation initiative and the new Goods and Service Tax (GST) will start to have a positive effect on the economy. It noted that these policies are designed to improve transparency, broaden the tax base, and draw the informal, cash-based economy into the formal sector.

According to the report, continued economic growth underpins gold demand. It also noted that as incomes rise, demand for gold jewellery and gold-containing technology, such as smart phones and tablets rises. It believes that income growth also spurs savings, helping increase demand for gold bars and coins. Meanwhile, it highlighted that global growth increased in 2017 and the market expects the trend to continue in 2018 as well. It pointed out that with the European and US economies expanding, coupled with decreasing unemployment in recent years, there has been a rise in wages yet inflation indices are low.

The report further said that households and businesses are rebuilding their finances and are optimistic about the future. Besides, it said that China's economy to continue growing, but the nature of growth is changing from investment-driven growth to a consumption-led model. It added that this could affect the economic growth rate, but even if the Chinese economy grows at a slower rate than in the past, they see a more balanced model, aided by further global integration through its One Belt One Road initiative supporting a sustainable growth trajectory.

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