The gold market in India doesn’t always make many headlines over here in the UK, but rest assured that it affects you in ways you might not realise.
People in India buy and sell an enormous amount of gold and such a large scale of trading doesn’t come without its impacts. Supply and demand on the Indian sub-continent regularly sends ripple effects over to the gold price right here in the UK.
What’s the deal with India and gold?
India has always had a strong historical and cultural attraction to gold. So much so, in fact, that the Hindu founding myths are firmly rooted in the value of gold as source of security. Where in the UK, gold is often seen as a luxury, perhaps even a symbol of extravagance – in India gold is wise, sensible and responsible.
After years of financial instability, typified by high levels of inflation – the Indians know better than anybody else how valuable gold can be.
India’s gold market today
If you’d paid much attention to the limited coverage of the Indian gold market just a few months ago, you’d have rightly come to the conclusion that it was going through something of a rough patch. Disappointing sales figures and reports of buyers flocking to diamond jewellery instead of gold came after a dip in sales defined 2017’s autumn months.
As winter and the New Year approached, however, reports have begun to emerge that the slump was indeed just a temporary trend – as sales in India’s rural gold market improved by 15 per cent in December.
Does this affect the gold price?
There’s no definitive way to say that this phenomenon has a specific bolstering impact on the international gold price. Rather, it contributes to a range of other factors that mean gold remains secure and reliable in the New Year. And while gold has seen a fairly limited amount of movement over the last six months, factors like this increase the chance of that changing.