3 Factors Affecting the Gold Rate In India
The Gold Rate In India and other countries continues to break out to historic highs. Two of the main reasons for the recent price strength is the United States announcement to raise the debt ceiling and the other being the federal reserve's promise to leave short term interest rates near 0% through 2013.
Recent reports suggest that the demand for gold amongst Indian investors should only increase over the next several years. The following are 3 factors affecting the gold rate in India. Of course there are others, but these 4 are the main drivers.
1) History of Gold
India is the world's largest gold customer and it appears that isn’t going to change any time soon. Investors in India do not look at gold as suspect, the way many U.S. investors do. This is because of India’s long ties to gold that stretch back thousands of years.
Gold is not seen as just a precious metal or investment that comes in and out of season. It is viewed moreso as part of the culture, a bedrock of the society if you will. Indian's view gold as the foundation from which the earth was created. Gold is seen as the ultimate object of their affection. It is often passed down from generation to generation and would be the last asset sold if ever at all. In a way, Indians view gold the same way Americans view cash, as the ultimate safety vehicle. However, over the years, gold has assisted in maintaining purchasing power for it's owners, while cash has not.
2) Gold Gifting for Weddings
In the Indian culture, giving gold for newly married couples is common. Gold given to the bride is referred to as “stridhan.” This is and remains hers. She has full ownership for this gold, which also serves as an insurance policy against bad times or in the event that her husband dies. In such circumstances, gold provides protection for the family. Gold and jewellery expenses make up approximately 30-50% of combined marriage expenses. Gold is given in place of cash as it is seen as eternal and everlasting. With the current rising gold rate in India, there is no reason to expect this trend to slow any time soon. It should remain one of the key factors for years to come.
3) Increased Jewelry Demand
The annual value of India’s jewelry market is expected to rise to $48 billion (INR 2.13 trillion) by 2015, almost 75 percent higher than today's levels. This figure is based on a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The jewelry market is currently valued at approximately $27.5 billion (INR 1.22 trillion) and has been growing at a 15 percent clip. Much of this is due to increased income levels inPublish Post India, rising purchasing power and of course a higher gold price. In India, gold jewelry is viewed as a safe investment option that will retain it's investment value.
The Gold Rate In India and other countries continues to break out to historic highs. Two of the main reasons for the recent price strength is the United States announcement to raise the debt ceiling and the other being the federal reserve's promise to leave short term interest rates near 0% through 2013.
Recent reports suggest that the demand for gold amongst Indian investors should only increase over the next several years. The following are 3 factors affecting the gold rate in India. Of course there are others, but these 4 are the main drivers.
1) History of Gold
India is the world's largest gold customer and it appears that isn’t going to change any time soon. Investors in India do not look at gold as suspect, the way many U.S. investors do. This is because of India’s long ties to gold that stretch back thousands of years.
Gold is not seen as just a precious metal or investment that comes in and out of season. It is viewed moreso as part of the culture, a bedrock of the society if you will. Indian's view gold as the foundation from which the earth was created. Gold is seen as the ultimate object of their affection. It is often passed down from generation to generation and would be the last asset sold if ever at all. In a way, Indians view gold the same way Americans view cash, as the ultimate safety vehicle. However, over the years, gold has assisted in maintaining purchasing power for it's owners, while cash has not.
2) Gold Gifting for Weddings
In the Indian culture, giving gold for newly married couples is common. Gold given to the bride is referred to as “stridhan.” This is and remains hers. She has full ownership for this gold, which also serves as an insurance policy against bad times or in the event that her husband dies. In such circumstances, gold provides protection for the family. Gold and jewellery expenses make up approximately 30-50% of combined marriage expenses. Gold is given in place of cash as it is seen as eternal and everlasting. With the current rising gold rate in India, there is no reason to expect this trend to slow any time soon. It should remain one of the key factors for years to come.
3) Increased Jewelry Demand
The annual value of India’s jewelry market is expected to rise to $48 billion (INR 2.13 trillion) by 2015, almost 75 percent higher than today's levels. This figure is based on a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The jewelry market is currently valued at approximately $27.5 billion (INR 1.22 trillion) and has been growing at a 15 percent clip. Much of this is due to increased income levels inPublish Post India, rising purchasing power and of course a higher gold price. In India, gold jewelry is viewed as a safe investment option that will retain it's investment value.
Making acquisition more convenient are the numerous online jewelry stores where people can choose from a variety of products and do so 24 hours a day. Jewelry demand sees a major increase for India's annual festive season which runs from August through October.
These 3 factors serve as the primary driver of the gold rate in India and should continue to keep India the world’s leading gold purchaser. As previously mentioned gold buying among Indians makes them proud. It is a part of their lifestyle whereas in the U.S. gold is often times seen as suspect.
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