The stunning fall in gold prices couldn’t come at a better time for Indian consumers. It’s wedding season in India, the world’s biggest buyer of gold, and this is a traditional time for people to give gold to brides or to wedding guests. Moreover, next month is the Akshaya Tritiya festival, a time for Hindus to buy gold and other precious metals.
“The decline will be positive for jewelry as there will be a pick-up in demand because affordability will increase,” Mehul Choksi, chief executive officer of Gitanjali, India’s biggest jewelry and diamond retailer, told Bloomberg News.
Consumers aren’t the only people in India happy to see a bear market for gold. The country’s economic gurus, too, are no doubt relieved by the 19 percent fall in gold prices since the beginning of 2013. The high cost of gold has been a significant burden for the already struggling Indian economy. Economists and ratings agencies, for instance, have been worried about India’s current account deficit, which hit a record in the last quarter of 2012 of $32.6 billion, or 6.7 percent of gross domestic product. Gold imports account for about 3 percent of GDP, Chief Economic Advisor Raghuram Rajan said in an interview in March.
Indians don’t purchase gold just for festive occasions. Many people in India also have been alarmed by the government’s inability to keep prices under control and so have been putting their money into gold. Wholesale prices increased 5.96 percent last month, better than expectations, the government reported on April 15. That’s the slowest gain in 40 months. But in February, prices jumped 6.84 percent and consumer prices last month rose 10.39 percent.
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