Central banks play an important role in the pricing of gold, but sometimes it is the microeconomics of private investors which will drive the price. Gold dealers in India have been on strike in response to the Indian government imposing an important duty on gold of 4% which is double the previous duty. India is the largest gold market given it is used as both a store of value and a cultural gift at weddings and special holidays. The gold market in India is almost 5 times larger than the US and greater than all of the US and the major buyers in the EU. The table below provides the last yearly sales.
India 933.4 mt
China 769.8 mtUS 194.9 mt
Germany 159.3 mt
Turkey 144.2 mt
Switzerland 116.2 mt
Like many commodities, the demand in emerging markets is growing much larger and faster than the developed markets. This recent strike is a contributing factor to the fall in gold prices.
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