With the world's largest population of gold buyers about to shift into high gear following the end of a jewelers strike that has hampered sales of the metal within India, the price of gold is expected to make a sharp move upwards due to the resurgence of people more than ready to purchase tons of the metal for ceremonies, holidays, and personal acquisition.
In a strike that has seen the jewelry industry battle government regulators over import duty taxes and restrictions to gold, a compromise was reached on March 21 that should begin to have significant effects on the price and supply of the metal worldwide.
Major news in the gold market over the weekend. With the world’s largest gold-consuming nation reaching an agreement to resume metal sales for the first time in nearly three weeks.
That’s in India. A critical gold consumer globally, where buying had been idled since the beginning of March by a nation-wide strike by the jewelry sector.
But that strike is now officially over. With the president of India Bullion and Jewelers Association, Mohit Kamboj, announcing late Saturday that jewellers have reached an agreement with the government to return to work.
Details are still emerging, but here’s one of the most critical takeaways: as part of the back-to-work deal, the Indian government will not roll back the1% sales tax on gold that it announced in a surprise move as part of its February 29 budget.
That sales tax had been the major trigger for the jewelers strike. But it appears that India’s gold sellers have relented on demands that the government shelve the extra levy.
Whatever the case, the good news for the gold market is that India will now be buying again — for the first time since February. Which should give a lift to gold prices — especially with reports suggesting there is a lot of “pent up” demand here after the 19-day strike. - Pierce Points