Addressing a press conference after the Reserve Bank of India’s central board meeting, Sitharaman said gold buying by households continues to be driven largely by cultural and seasonal factors.
“Gold has always been a favoured investment for households, whether as an asset class or for jewellery,” she said.
“So, high-pitched demand for domestic consumption also sees a seasonal spike during festival season, during Akshay Tritiya and so on. We are watching it, but I am not sure it has reached such alarming proportions, given the tendency or natural thing as it is in India for investing in gold, buying gold. And therefore, I think it’s not gone in that sense beyond a certain limit.”
She added that domestic consumption has been tempered by the sharp rise in global bullion prices, which are “much beyond the usual increases and fluctuations” seen in the precious metals market.
The finance minister attributed the surge in prices to strong buying by central banks worldwide.
“Most countries, particularly their central banks, are buying gold and silver and storing them… so the international price of gold or silver, spiking up and down,” she said.
RBI Governor Sanjay Malhotra, speaking alongside Sitharaman, said the central bank was monitoring gold imports but did not see them as a macroeconomic concern at present.
“We are not going to be concerned about gold imports, especially because our external sector continues to be very robust and strong. If you look at numbers from April to December, the quantity of gold, in value terms, there was hardly any increase,” Malhotra said.
