India gold demand stifled in top buyer by prices, laundering curbs

Bloomberg

Rising gold prices and government measures to enforce compliance in the Indian jewellery industry are deadening demand in the world’s second-largest bullion market at the start of the traditional festival season when buying usually explodes.
“If you ask me, I wouldn’t purchase gold even if it was Diwali,” Prathamesh Mallya, chief analyst at Angel Commodities Broking, said, referring to the Hindu festival of lights. “A lot of things have been happening across the globe that have been pulling up prices. And if North Korea sends another ballistic missile, you will see prices rising again.”
Bullion has climbed almost 10 percent on the Indian market this year as world prices increased on global tensions and reduced chances of a further hike in US interest rates in 2017. In India, a crackdown on money-laundering and a revamp of the taxation system have roiled the industry. That’s soured the outlook for demand during the festival season, which peaks around the time of Diwali on October 19, when gifting of gold jewellery is considered auspicious.
A strengthening rupee has curbed increases on the local market, but with overseas prices expected to climb to $1,400, Mallya said.