The World Gold Council said it could take up to three years for India’s gold demand returns back to normal levels, in a piece of news that could indicate an overhang on gold prices in the medium term.

This forecast comes months after speculation that the Indian government would seek to curb private gold holdings amid a larger crackdown on crime and a shadow economy. From Kitco:

Tuesday, the WGC said that they see demand in one of the world’s top gold-consuming nations rising by between 850 to 950 tonnes by 2020, on an improving economy and strong demographics. The optimistic report comes after a dismal 2016 with expectations that the country imported only 650 to 750 tonnes of gold, the lowest level since 2009.

Uncertainty surrounding government actions could make 2017 a somewhat difficult year for gold prices.

“Any tightening in gold-related policies, such as the measures that have recently been implemented to regulate and formalize the gold industry, are disruptive and will stifle demand in the short to medium term,” said the industry group, which works to help measure, stimulate, and sustain demand for gold around the world.

The good news for gold in the medium term is largely tied to demographic trends. “For a 1% increase in income per capita gold demand rises by 1%,” said the WGC. It also pointed out that the IMF expects per capita income growth of 35% from 2015 to 2020, which could be a major driver of rising demand.

The SPDR Gold Trust ETF (NYSE:GLD) fell $0.51 (-0.44%) in premarket trading Wednesday. Year-to-date, the largest ETF tied to gold prices has gained 5.16%, versus a 1.82% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #3 of 32 ETFs in the Precious Metals ETFs category.

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