A SENIOR FIGURE in India's gold market says the high Gold Price – worsened by a plunging Rupee and higher import duty – is going to "moderate" demand throughout 2012.
Formerly the world's #1 consumer of gold, India was overtaken both in late 2011 and again in the first 3 months of 2012 by China, according to data produced for market-development organization the World Gold Council.
Speaking to Reuters last week, "Sentiment is down," said the World Gold Council's managing director India, Ajay Mitra.
"The way customs duty has been administered will see moderate demand over the next couple of quarters. I don't see it as strong as we saw in the last two years."
Jan-to-March this year saw import duty on Gold Bullion quadrupled. Private demand to Buy Gold in India fell by 29% from the first quarter of 2011.
Speaking in February, and setting a target for Gold Bullion imports of $38 billion this tax year, down some 35% year-on-year, "The stabilisation of basic macroeconomic conditions at home is expected to curtail the demand for imported gold to be held as an asset by Indian households," said C. Rangarajan, chairman of prime minister Manmohan Singh's economic advisory council.
The Gold Price for households in India – formerly buyers of 1 ounce in every 5 sold worldwide – hit new all-time highs in December 2011. Since then the Rupee has fallen further still on the currency markets, dropping to record lows against the US Dollar and halving the 10% drop in global prices.
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