PRECIOUS METALS | Analyst: India's Gold Import Tax Hike Unlikely to Curb Demand

Gavekal Research analyst Charles Gave has stated that India's decision to increase the gold import tax is unlikely to suppress local demand for the precious metal. According to Jin10, Gave noted that this move has already led to a depreciation of the rupee against gold. He further explained that this situation might actually encourage more gold purchases by locals as a means of savings. Gave added that although the government needs to utilize India's gold resources, those who have long been accustomed to saving in gold are unlikely to relinquish their holdings unless offered substantial rewards. He suggested that gold-linked bonds could potentially better support government financing through principal and interest payments while maintaining gold levels.