Post demonetization has affected yellow metal the most, as the demand for the metal had registered a significant drop, especially in December & January. 

Gold imports reduced to 54.10 tonnes in December & 53.20 tonnes in January month against the high of 119.20 tonnes in November, the month of government's demonetisation move. 

The decline in January is 43 percent against year on year basis in January 2016. The surprise decision of the scrapping of the high-value currency notes of Rs. 1000 & 500 took the economy hard reducing demand in different commodities including the darg of demand in the yellow metal.

Accoding to an assessment paper available from RBI, after the demonetization drive, there was a "sudden spike" in the prices of the gold, as buyers were reportedly willing to pay higher amounts & premiums to purchase the gold metal while disposing of the old currency notes with jewellers. Due to the huge demand of gold suddenly, there was a surge in imports of the yellow metal in the November month, exceeding the October levels of Gold imports. Gold imports however registered a decline since December 2016 " the paper said.

The RBI said in a statement that around 80 percent of the precious metals like gems & jewellery purchase is made through cash & there was a huge impact on the demand side due to demonetization.

India is one of the largest importers of Gold in the world and imports are due to demand in the jewellery industry. In volume terms, the country's total gold imports declined to 546 tonnes in April-January of this fiscal, much lower than 892.9 tonnes in the year-ago period.Total gold imports had totaled 968 tonnes in 2015-16.

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