By Ruma Dubey

In this entire implementation and transition to GST there was one product which shined bright and emerged dazzling. Gold!

The World Gold Council (WGC) came out with its report , “Gold Demand Trends Q2 2017” and it had quite a revelation – in the second quarter of the calendar year 2017, the total demand for gold jewellery in India surged up by 41% (YoY) to 126.7 tonnes. And worldwide too, there was an increase – demand for gold jewellery in Q2CY17 rose 8% (YoY) to 480.8 tonnes.

This did not come as a surprise for most in the industry as the gold import figures in May hit an all-time high of 104.6 tonnes. So why this sudden spike up in gold when it was not really the “season?”

The reason was pure and simple – GST. It was expected that the Govt would levy a very high, almost punitive rate on gold; the expected rate was 5% and the actual GST came, to the surprise of all, at 3%. Consequently, before the GST rate was announced, consumers went on an almost panic buying spree, stocking up on huge quantities of gold and once the rate came in, like turning off a tap, the buying also receded.

Gold is always considered to be that safe haven,  the one thing which in times of uncertainty is certain to remain rock solid.

This increased demand for gold jewellery was reflected in the performance of PC Jewellers and TBZ in the last two days. Both reported a very good rise in both topline as well as bottomline.

But what about the view ahead for H2? Now, therein lay the catch. The WGC ha said that gold demand is expected to remain subdued for a few weeks as "consumers who have recently purchased are unlikely to do so again in the short term."

Seasonally, the second half is the best time for gold as it is the wedding and festival season. That is the time when gold imports also take off; they are highest in the year. But a Reuter’s GFMS survey has said that gold imports, probably for the first time will nose dive in H2. It is of the opinion that because imports in the first half is already near the whole of 2016 volumes, it is less likely in that imports will cross 250 tonnes in the second half. Thus GFMS is expecting a 50% drop in H2.

Many do not agree to this as the feeling is that thanks to the monsoon and bountiful harvest, demand from rural India will in fact perk up. And after loan waivers, farmers might actually turn back to buying gold.

Well, let us see how things actually pan out. But the general perception is that H2, like always will be robust.