We’ve been watching for this. The first report of gold sales for this year’s Indian wedding season are pointing down. Three main factors are cited for the decreased gold demand: uncertainties surrounding the new GST tax, government crackdowns on new compliance regulations, and rising gold prices.
Whatever the reasons, so far it’s all meant lower gold sales than last year. And last year was no record-setting year. Gold demand hit a 7-year low last year when the government withdrew high-denomination cash notes. The aim there was to reduce the size of the untaxed black market, and halt supposedly rampant money laundering.
Hopefully those efforts are working, as the legitimate gold market is paying a big price. Gold dealers are certainly taking a big hit. Hopefully the bad guys are, too.
What this means for the price of gold is most likely less support, though it’s still too early to tell if there is an actual downdraft coming. Today’s featured article gives some more insight and details into the situation in India, along with a few choice quotes.
Related: How to Time the Market Cycle