GOLD DEMAND - ECONOMY
News: High
prices lead to gold demand falling 17% in Jan-March quarter
What's in the news?
● With
high prices the demand for gold in India for Q1 2023 (January to March) shrunk
by 17% to 112.5 tonnes as compared to overall demand of 135.5 tonnes in the
year-ago period, according to the World Gold Council (WGC).
Key takeaways:
● India’s
gold demand value during the quarter was ₹56,220 crore, down by 9% as compared
to ₹61,540 crore in the year-ago period.
Gold and Economy:
1.
Gold was used as the world reserve
currency up through most of the 20th century. The United States used the
gold standard until 1971.
2. Hedge against inflation:
● The
demand for gold increases during inflationary times due to its inherent value and limited supply.
● As
it cannot be diluted, gold is able to retain value much better than other forms
of currency.
3. Affect on Currency:
● When
a country imports more than it exports, the value of its currency will decline.
● On
the other hand, the value of its currency will increase when a country is a net
exporter.
● Thus,
a country that exports gold or has access to gold reserves will see an increase
in the strength of its currency when gold prices increase, since this increases
the value of the country’s total exports.
Largest Importers of Gold:
Largest Exporters of Gold:
Go back to basics:
World Gold Council (WGC):
● It
is a non-profit association of the
world's leading gold producers.
● The
WGC covers the markets which comprise about three-quarters of the world's
annual gold consumption.
● Headquarters - London
(Having offices in India, China, Singapore, Japan and the United States).
Members of WGC:
● It
is a market development organization for the gold industry which includes 25 members and many gold mining
companies as well. (India is a member)
● The
WGC was established to promote the use of and demand for gold through
marketing, research and lobbying.