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HomeChannelsFeaturedHigh gold prices killing off Indian demand; implications for Dubai

High gold prices killing off Indian demand; implications for Dubai

|By Arabian Post Staff| High gold prices are threatening India’s status as a leading importer of gold and this has significant impact on Dubai gold trade.

According to Indian reports, the Indian gold bazaars have seen a mass movement of people selling their gold jewelry. The market has transformed from whole sellers and brokers to individual gold sellers looking to take advantage of the high price of gold, up 22% this year so far.

Gold jewelry is an especially critical piece of the Indian economy and culture. A spike in imports usually occurs during the last half of the year, in anticipation of seasonal festivals where giving gold is a long tradition. The December quarter usually accounts for about a third of India’s gold sales. However, large recycling efforts are dampening the demand as groups like Indian farmers are selling to invest in extra seed.

So much recycled gold has come into the system in the past few months that it has met 45% to 60% of the local gold demand, according to the Wall Street Journal.

Eastern countries have traditionally bought even more than the West when it comes to gold. But 2016 has seen a shift, with Western countries beginning to pick up the slack.

Such a drop in demand in the East could potentially be a problem for global pricing. However, demand for gold in the US has risen 27% this year, with investors buying up American gold eagles and driving their demand up 84% since the first half of the year. Despite gold prices seeing a pullback in the past few months, global prices are still just below record highs.