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Temporary Halt in Indian Gold Buying May Explain Recent Price Drop

Higher prices curbing demand? Not so fast.

Analysts have cited a number of possible explanations for the fall-off in India’s gold buying. Including inclement weather, and higher prices curbing demand.

But it appears there’s one major factor at play here — possible changes to India’s import taxes, which could be coming very soon. Sources said widespread speculation that India’s federal government is getting ready to scrap the current 10% import duty on gold. A move that many buyers believe could be announced as part of the national budget, set to be unveiled soon Many buyers are therefore apparently holding off on purchases ahead of this date — waiting to see if prices will be lower after the tax is removed. This could mean that buying will be subdued the next few weeks, but we could see a surge in purchases after that date — if the tax is cut, or even if it’s maintained and buyers lose their reason to delay purchases. Watch the price action over the remainder of the month — and keep an eye out for announcements on gold taxes anytime.