Indian Gold Demand on the Decline

Reuters reported that the fact that the Indian gold price has dropped one-quarter over the last year has left local buyers uncertain if the yellow metal is a good store of value.

As quoted in the market news:

The main beneficiary has been Indian stocks, which have been clocking up records on hopes that Prime Minister Narendra Modi can deliver on the promise of ‘better days’ ahead that swept him to power in May’s general election.

Beyond short-term sentiment, a major push by Modi for every household to get a bank account, better education and living standards, and falling inflation expectations, could herald a more secular change in investing habits.

‘The attachment of Indians to gold will remain,’ said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives and Commodities Ltd., referring to gold’s culturally embedded role in dowry gifts or decorating Hindu temples.

‘But as the banking network expands and literacy rises, people in rural areas will explore other investment products like mutual funds or bank deposits. The mindset is slowly changing.’

Click here to read the full Reuters report.