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India leads the new gold rush

The piling of gold jewellery in India is said to be one of the prime reasons for its soaring sales, which hit a record #30.7 billion last year.

india Updated: Feb 24, 2006 20:05 IST
Vijay Dutt

The piling of gold jewellery in India is said to be one of the prime reasons for the soaring sales of gold, which hit a record £30.7 billion last year, as a weak dollar, concern about terrorism and rapid development of India diverted investment away from shares and bonds.

Jewellery accounts for about three quarters of gold sales and last year's rise in total gold revenue was pushed up by a 25 per cent increase in sales relating to Indian jewellery. India now accounts for 23 per cent of global consumer gold sales by volume. America is second with 12 per cent sales.

Prof Olden, managing director of the World Gold Council is quoted saying, "Gold is traditionally a good investment in times of political and economic uncertainty. The dollar has been weak for several years, while China and India and the Middle East have seen huge increases in disposable income."

The price of gold has naturally sky-rocketed and doubled in the past three years. It closed on Wednesday night at $553.40 an ounce. The value of gold sales rose 14 per cent to $53.6 billion last year while the volume of the gold jewellery sold rose by five per cent to 2,736 tonnes, according to the World Gold Council.

A Nimus analyst has said the price of gold was likely to remain high for a few years more. As Indian middle class grows more affluent, there would be more demand for gold. The Chinese government was also likely to step up its investment in gold as its economy grows.

The price of gold is predicted to hit $600 an ounce this year.

First Published: Feb 24, 2006 20:05 IST