For nearly six weeks, the global gold market has been missing its largest buyer. With gold purchases across the nation of India being paralyzed by a strike from national jewellers’ associations.
But yesterday, local reports suggest that a return may now be at hand.
India’s papers reported that many gold sellers reopened their doors on Monday. With as many as half of jewellery stores now back in action across the country.
That comes after jewellers appear to have been waited out by the government — which has refused to back down on a proposed 1% sales tax on gold jewellery. With reports recently suggesting that several gold-sellers had committed suicide over the past week, after the strike cut into their business and profits. Related: Oil Up As Bullish Sentiment Returns To Markets
Spokespeople for a number of jewellery associations confirmed that most sellers are now going back to work. With the groups saying they had assurances that the government would treat jewellers “fairly” in assessing the new sales tax.
In fact, a number of unions had agreed to return to work as far back as March 19. But the decision had limited effect on the ground, with numerous regional jewellers’ groups deciding to continue strike action. Related: The Halliburton-Baker Hughes Merger is Falling Apart. What Happens Next?
But it now appears that this week’s resolution will have wide-reaching effect. With sources in Mumbai telling papers they expect “nearly all jewellery shops” will be open by the end of this week.
This is obviously great news for the global gold sector. With a pick-up in Indian demand likely to lend solid support to imports and prices. Related: Struggle For Libya’s Oil Wealth Reaches Climax
It’s also notable that India is still in the midst of its wedding season — when gold demand typically runs high. And with gold-sellers now returning to work, buyers may be quick to catch up on securing supply that’s been tough to get over the last month and a half.
Watch for an upward push in the gold price over the coming weeks, if confirmation emerges that India’s gold industry is indeed open again for business.
Here’s to the return of the king
By Dave Forest for Oilprice.com
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