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Indian Gold Demand

Indian Gold Demand

The demand for gold has been on a steady rise after prices of the precious metal took a plunge soon after the global financial meltdown subsided. These demands have been observed to come from different factions, and mostly are from Asian factions that include investors, savers and industrialists which has brought the price of gold to an exceedingly favourable position currently especially for gold buyers who believe that gold is mightier than the dollar.


The primary factors that drive demand in Asia is not a singular aspect due to the fact that manufacturers, investors and jewellers alike scramble to get their hands on physical gold while at the same Asian gold buyers trade up ETFs on a consistent tangent. As the Asian economy progresses at a better pace in comparison to western economies the precious metal industry seemed to stabilize at different points as Asian investors get more optimistic and throw caution to the wind at the same time in their buying sprees so as not to drive the prices up until they got their fair share of the precious metals.

The flow of gold into the Asian markets has been seen as a natural balancing act that economies tend to phase through due to deficits in either markets. As markets merged across the globe, Asian gold buyers have however redirected the gained margins back into the western markets in order to maintain prices at a steady position. The demands however are attributed to different factors, such as the demand for the precious metal in India stemmed from the new changes in government that introduced new policies causing speculators to expect the second largest bullion consumer in the world to pick up pace as law makers continue revising their policies prior to which the ballooning economy forced legislators to impose a duties never seen before on gold that were acquired from foreign nations.

However the import duty of 10 % was justifiable as India’s imports of gold happen to be also the second highest import bill which caused a substantial deficit in exports. The duty although did have the desired effect towards the reduction of gold imports but it however, did increase revenue for the government for increased spending towards infrastructure that was aimed towards attracting FDIs (foreign direct investments).

The short term results for the high duty that was imposed was in general negative according to most traders, however the long term perspectives according to them as well was positive. The next step towards balancing the deficits would probably be a reduction on the duty provided the imported gold is destined to be exported again. This move by the newly elected government was received positively by most industry observers as it seemed to be more of a subsidised move by the government to promote the ‘import – process – export’ concept which is currently being practiced by other nations such as the BRIC countries.

Most economist are looking at countries such as India, China and Russia as positive prospects with regards to investments and their perceptions are well founded as the markets in these countries look ripe and ready for harvest and the precious metals market is no exception.

The economic sense of investing into the precious metals markets of these countries is overwhelming and investors are confident that their ROIs will be more than just satisfying.

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