WGC to soon submit blueprint on spot exchange of gold

The World Gold Council (WGC) Wednesday said it will soon submit the blueprint on spot exchange for the yellow metal to the government. A physical exchange would enable jewelers, retailers, refiners, and banks to trade over a regulated platform.

"We have given a blueprint as a steering committee, we have drafted it and it is in the final stages, we will release it shortly," Somasundaram PR, managing director-India, WGC, was quoted as saying in a release.

The steering committee comprises all industry stakeholders including WGC, trade associations, key international banks and bullion banks. At present, the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX) offer gold futures contracts in the country but do not have a platform for physical trade.

Meanwhile, talking about gold demand, Somasundaram said demand is likely to remain subdued in 2018. While the demand for gold in the first half was seven percent down over last year, the WGC expects it to pick up in the second half, he added.

The demand will still be around 700-800 tonne in this calendar year, he said. Somasundaram said reforms like GST and demonetization have made the jewelry industry more organized and the grey market weak.

"Considering gold demand is influenced more by an increase in income, we expect it gradually go back to 800-900 tonne by 2020," he added. Somasundaram said the government should refrain from imposing any restriction on gold as the market is very subdued right now.

According to him, the current account deficit (CAD) is because of high oil prices and the rupee depreciation is because equity market money is going out and has nothing to do with people buying gold.