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Gold may lose its sheen as investment
Why is it in the news?
- As per a recent Morningstar. study, gold, which has always been the preferred choice of investment in India, is likely to lose its sheen.
More in the news
- A combination of government initiatives and shifting preferences is expected to slow the growth of jewellery demand in China and India.
- The two countries are world’s largest markets for gold.
- Major Factors:
(1) In India, the government has long sought to minimise gold imports to strengthen the rupee.
(2) This included increased taxes to make gold more expensive to purchase.
(3) Better social security or increased forms of other consumer spending, such as technology.
(4) Introduction of Exchange Traded Funds (ETFs)
- Luxury goods surge:
(1) While Chinese gold purchases rose about 15% from 2012 to 2018, purchases of all personal luxury goods rose 230%.
(2) This is representative of gold’s declining share in purchases going forward.
Source
The Hindu.