“The US, and several European countries such as Greece and Italy hold huge quantities of gold. We expect these countries to sell a part of their reserves to fight the financial crisis, bringing down prices,” said P.V. Jose, president of the Jewellery Manufacturers Association.
``Gold stocked with central banks of Euro-zone members is worth about $545 billion,'' Time magazine reported last July. The Greek central bank’s gold reserves are valued at $5.8 billion, while Portugal has reserves worth $19 billion, the article mentioned.
Gold prices hit a new high on Thursday, to 30,550 rupees, marking five straight sessions of gains, with investors flocking to buy the precious metal considered to be a safe bet during hard times, according to several news reports.
Jewelers are a troubled lot. Gold demand in India has dropped by about 40 percent in the last one year, said Jose. Higher inflation has trimmed disposable income in India leading to reduced demand on a depreciating rupee, according to a Reuters report.
“Demand is very low and has been this way for a while now because middle-class households are not buying,” said a Mumbai-based jeweler requesting anonymity.
Indian households hold close to 20,000 tons of gold, Jose said. The country’s central bank holds just under 600 tons, the Hindu Business Line reported. A majority of Indian households will not sell their gold despite high prices because traditionaly gold is passed on to the next generation, Jose said.