Gold rates and the Indian Economy
Gold has a metallic element with melting point at 1064 degree centigrade and boiling point at 2808 degree centigrade. Gold effects Indian economy because it is a non-productive asset. It does not add to any real value of productive capacity of the economy. Most of the Gold purchased in India gets converted into jewellery or kept in lockers and safe boxes. Those who hold are waiting for it to appreciate so that they earn some income and return on investment or to increase their wealth. Gold in India is used as a form for tackling inflation and holding because its rarity is a better way to counter the fluctuations in currency. Gold is the most stable investment which is why every country has a Gold reserve managed by its central bank. Any decision taken by the bank regarding Gold reserves can have impact on Gold rates. Govt. policies can also have a direct or indirect impact on Gold rates.Gold imports directly effects Current Account Deficit (CAD). Large CAD with respect of GDP mak