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India's economic boom is expected to be a solid backing for gold demand

November 08, 2018 17:17
source: Chart home
edit:Eastern Fortune Network

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This week India celebrated its biggest traditional festival, Diwali. In the past, the rise in gold demand before the Diwali has been enough to push the price of gold higher. However, the demand for gold coins and accessories before the holiday was mild, as the Indian rupee weakened against the dollar, making gold lose its appeal to some buyers.

According to Reuters, the price of gold calculated in rupees at the end of October rose to its highest level since September 2013. Affected by the expectations of the Diwali, gold prices usually present a premium, but this year many retailers are trying to attract customers through discounts.

And in the future may encounter more pain caused by the devaluation of the rupee. UBS expects a global report in a recent reportOil priceThe rupee may continue to be under pressure. India is a net importer of oil. Oil prices have risen by more than 20% in the past 12 months, benefiting from supply disruptions in Venezuela and Libya and elsewhere. The US imposed sanctions on Iran, India’s third-largest crude oil supplier, also boosted oil prices.

Despite this, the Indian economy is currently expanding at the fastest rate in the world. As the middle class grows, this should have a positive impact on gold demand in the long run.

InternationalMonetary FundThe organization (IMF) recently predicted that India's economy will grow by 7.3% this year, 0.7 percentage points higher than the expected growth rate in China, and 2.6 percentage points higher than the average of emerging and developing economies. India's economic growth rate is expected to be faster next year, reaching 7.4%.

According to UBS, the wealth of Indian billionaires increased by 36% in 2017. The number of Indian billionaires has increased by 19 to 119.

In summary, U.S. Frank Holmes, chief investment officer at Global Investors, predicts that the rapid expansion of India's economy will have a significant impact on gold demand and create more wealth.

(Article source: Chart home)

                (Editor: DF134)

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