High and persistent inflation is one of the reasons for shifting preference towards investing in gold.
"Gold imports are highly correlated with households' inflation expectations. Indeed, in recent times high and persistent inflation has been one of the reasons for households preferring to put their saving in non-financial assets including gold, given relatively low real interest rates on deposits and financial instruments such as small savings and volatile capital markets."
There has been conflicting data releases on gold import quantities and value and so far nobody has a clue to the extent of the metal being smuggled into the country through airports, sea and land. Although official data shows India's gold appetite has fallen, actual imports could be higher than reported, Macquarie said.
There has been conflicting data releases on gold import quantities and value and so far nobody has a clue to the extent of the metal being smuggled into the country through airports, sea and land. Although official data shows India's gold appetite has fallen, actual imports could be higher than reported, Macquarie said.
"The data released by Ministry of Commerce, gold imports slowed to US$39bn in 2013 from US$53bn registered in 2012. Specifically, on a monthly basis, gold imports to India have shrunk to an average of US$1.3bn since June 2013, registering a decline of 74% over US$5.1bn (average) recorded in the previous 12 months. Government measures including increases in customs duty, measures to disincentivise gold imports and rupee depreciation all helped moderate Indians’ demand for gold. While there is no doubt that gold demand in India has slowed over the past few months, such a significant moderation seen over the past 6 months based on official data looks unlikely, in our view – we suspect actual imports would be somewhat higher than official data suggesst."
According to the latest data released by WGC, Indians’ demand for gold (including jewellery and net retail investment) in volume terms stood at 975 tonnes in 2013, up 13% YoY. While gold demand in 1H of 2013 was up 59% YoY as Indians took advantage of
lower gold prices globally, the demand in the 2H of 2013 declined 24%YoY. Even in US$ terms, the slowdown in gold demand in India in 2013 was quite modest. As WGC mentioned in its report, the Indian gold market is fed by a number of alternative sources, including recycled gold, domestic production and unofficial imports. According to WGC,recycled gold helped to fill the gap left by the sharp drop in official imports.
lower gold prices globally, the demand in the 2H of 2013 declined 24%YoY. Even in US$ terms, the slowdown in gold demand in India in 2013 was quite modest. As WGC mentioned in its report, the Indian gold market is fed by a number of alternative sources, including recycled gold, domestic production and unofficial imports. According to WGC,recycled gold helped to fill the gap left by the sharp drop in official imports.
Demand-pull rising prices is a situation where total requirement constantly surpasses total supply when the economic system is near or at full career. Aggregate requirement could increase because of several reasons. A cut in personal earnings tax would increase non reusable earnings and promote a development of customer expenses. Persistently demand
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