Demand For Gold Jewellery in India is Falling Due to High Metal Prices
11.27.11
As the price of gold hits record highs, demand for gold jewellery in India, the world's largest consumer of the precious metal, is beginning to drop. With India's first wedding season nearly half over, merchants in Mumbai are noting that middle class buyers are showing restraint in their purchases.
This was even the case over the Gudi Padwa holiday in Maharastra, which is considered an auspicious time for the buying of gold. Turmoil in the Middle East, a falling US dollar, and inflationary pressures have all combined to lift market price for the precious metal as a hedge. Surging food and energy prices are putting pressure on the Indian economy and consumers, and central bank rate hikes to try to rein prices in are likely to crimp the economy going forward as well. Another factor is that young middle-class Indians in the cities are moving away from the traditions of their parents, including a preference for gold jewelry.