The latest trade data for India and China show that imports remained soft in August. We had always believed that demand in India would weaken in Q3 as a result of the implementation of the Goods & Services Tax (GST). In China, we expect imports to pick up over the coming months ahead of the upcoming festive season, but consumption is likely to remain subdued by historical standards. In part, this is due to the recent inclusion of China’s A shares in the MSCI Emerging Market Index, which has dented demand for gold for investment purposes. But it also reflects lower appetite for gold jewellery. Overall, we doubt that physical demand will be of much support to gold prices.
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