Correlations: India's Gold Grab

Slump in gold prices spurs demand for bars and jewelry in India

The price of gold has fallen 23 percent since October as investors shift away from the perceived security of precious metals to the risky but potentially high returns of equities. One group, though, is taking advantage of gold’s price drop. Purchases of gold in India were so strong in April and early May that the finance minister complained that the nation’s hunger for gold was widening the trade deficit. The mid-April slump in gold prices—the biggest in more than three decades—spurred Indian banks, traders, and jewelers to import more than 100 tons of gold that month. Gold jewelry is in high demand for the wedding season and was widely purchased on Akshaya Tritiya, a Hindu festival on May 13 that is considered a propitious day to buy gold and silver.

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