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How India is affecting the gold prices in USA

 

Gold bullion vs Gold StockGold is the most valuable investment and saving option in the world .In countries like India gold has a more value than a simple saving asset .The wedding season, economical set-ups and the use of gold in the manufacturing are improving the demand graph for gold.India imports most of the gold from USA and the Indian utility of gold affects the gold prices in USA. CNBC reports that market demand has increased in last few months especially in countries like India. The most important reason for this increase is starting of the Indian wedding season and also worldwide recession fears in the minds of the investors.Following are the most important reasons in India that are affecting the gold prices in USA.

Gold in Industries

Gold prices in USA are affected by supply and demand of  gold in the Indian industry. Gold is mostly used in the jewelry, electronics and photography industry. The increase in Indian industrial demand increases the american gold prices. Along with the jewelry manufacture, India also utilizes gold in medical field. It is used in the development of medical devices like precision electronics.

Gold Production in India

India’s gold production constitutes about 0.5% of the total gold production in the world. India requires about 700-800 tons of gold per year on average for its consumption. This means India consumes 30% of the world’s total gold production per year. Most of the gold consumed in India is imported gold. So improvement in Indian gold demand increases its gold imports. This trend applies pressure on the gold prices in USA. India is one of the biggest consumers of international gold, so the increase in the Indian gold demand affects the gold prices in USA.

 Jewelry Demand

Gold is very important in the India mostly due to the use of the gold in the jewelry industry.  Gold is extensively used in jewelry related Indian celebrations such as weddings etc .Whatever the reason, the gold remains prominent material in Indian culture .A 700-800 tons of gold demand has been reported in the India. In India brides are laden with gold , which is their liquid assets. These wedding seasons increase demand for gold thus increasing the gold prices in USA.

The Economic factor

India gold consumers in the markets are also affected by U.S. interest rates, Physical demand for gold among U.S. consumers is relatively weak and the U.S. only accounted for 10 percent of global physical gold demand. It is much less as compared to the gold demand in India and other emerging economies of the world India is the largest consumer of gold in the world. The Indian demand for gold is increasing with the passage of time mainly due to different economic reasons. The increase in Indian population and its purchasing power are two most important reasons for increase in the gold demand. India imports most of its gold requirement. The increase of the gold demand in the India market definitely puts pressure on the world gold market. It also increases the gold prices in USA.

 

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About Emaad Qureshi