New Delhi
03 October 2008
Over the past 12 months, gold prices have increased by nearly 50
percent. But the high prices have not dampened India's appetite for the
precious metal. Anjana Pasricha reports from New Delhi on India's
cultural affinity with gold.
After watching the steady
rise in gold prices over the past 12 months, 52-year-old Kanu Chadha
has radically raised her budget for the jewelry she wants to give her
daughter when she gets married next February.
Gold prices
exceeded $865 an ounce last month. But that does not deter Kanu Chadha
from continuing with her purchases of stone-studded bangles, necklaces
and earrings set in gold.
"There is no other way out. Jewelry is
part of an Indian wedding, so you have to do it," she said. "So I am
going on purchasing it despite the rise in price. You may cut an item
here or there, or make the weight a little less, but you still carry on
with it. That is how the Indian psyche goes."
India's desire for
gold dates back centuries. Parents and in-laws traditionally give gold
and gold-based jewelry as wedding gifts to the bride. It is considered
a woman's personal wealth. Indians also purchase gold during festivals,
as a gift to new-born babies, or as a safe investment.
Ajay
Mitra, head of the World Gold Council in Mumbai, says a recent study
among consumers showed that runaway prices are not going to stop
Indians from buying the yellow metal.
"Consumers across seven
cities in India came out very strongly that the intrinsic value of gold
continues to command a very high preference in their minds, and they
would continue to buy gold irrespective of what the absolute price is
as I said, it is intrinsic, it is auspicious, it is part of our genetic
upbringing," said Mitra.
The love of gold cuts across economic
classes. Mitra says the study covered families with incomes ranging
from $200 to $2,000 a month. All of them wanted to invest some of their
savings in the metal.
Gold is also bought heavily in rural
areas, where savings are often converted into the precious metal partly
because the banking system is not well developed. In fact, most village
marketplaces include a goldsmiths shop.
Indeed, jewelers are
unfazed by the rise in prices. They say the recent financial crisis in
the world will only reaffirm the faith that Indians put in gold. Many
middle class Indians, who had put their money in stocks, find their
stock investments have tumbled, but their gold purchases now command a
higher value.
India is the world's biggest gold consumer, importing about 700 tonnes to 800 tons a year.