Is Indian gold demand about to explode?
News
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Posted 15/05/2014
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There was some press about the large fall in gold imports in April on a year ago. Well for a start the import restrictions to try and stop Indians from buying gold came in after April last year and it was a particularly strong month. But more relevantly exit polls from the Indian election suggest Narendra Modi’s BJP will win with a parliamentary majority. Modi is widely expected to reverse the harsh import restrictions and hence there is likely a pause in buying awaiting this and no doubt a lot of pent up demand. The other key factor is the remarkable rise in smuggling of gold to avoid the restrictions. Government figures show a 446% increase in smuggling over the last 12 months and of course that is just the ones they caught… At a time when Chinese consumption is unrelenting, the entry of India back to its tradition high demand will be an interesting dynamic in the gold market.