India Recalibrates Gold Market

India Recalibrates Gold Market

Diwali starts this weekend. The Hindu celebration is the most auspicious time of the year to buy gold. Most pundits expect to see robust purchase data forthcoming from the world’s largest retail market for the metal. That demand should lead to a more buoyant gold price over the near-term, especially when paired with US political dysfunction. But for how much longer will Indian fundamentals set the tone for traders and investors? Urban consumers are beginning to favor household durables over high-end jewelry. Corporate policies have moved against cash-based Diwali bonuses; that money was often spent in gold showrooms. Greater bank activity in rural India means that gold may become less prominent as a store of value. We are mindful of these trends. They could upend traditional gold-price metrics over the years ahead.

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