Indians continue to chase gold higher despite domestic prices equal to $1,800

Despite the Indian government's best efforts to curb citizens of the Asian nation's appetite for gold and a plummeting rupee, the price of the metal continues to rise inside the country.

Gold hit a nine-month high on India's domestic bullion market over the weekend

Standard gold of 99.5% purity shot up by Rs630 to change hands at Rs31,790 per 10 gm from Friday's closing level of Rs 31,160.

The buying interest comes amid a sharp move higher for gold to close just under $1,400 an ounce in New York on Friday and a rupee falling to record low levels, which together make gold very expensive for Indian consumers to own.

Bull Market Thinking interviewed Vishal Vyas, head of operations at India’s top bullion dealer, Pushpak Bullions who said small shops are closing down in India, because there are no more gold to process thanks to the government's crackdown:

The trade controls are also pushing the price of gold higher Vishal noted, in that, “Since import duties have risen, the gold price in the Indian market is the same as it was when gold was $1800 oz.

When $1800 an oz. gold was in the market, it was 31,500 rupees per 10 grams of gold. Today gold is below $1400 oz., and the price is the same—31,500 rupees per 10 grams of gold.”

Based on the latest trade figures in July the country bought $2.9 billion worth of gold – an increase on June figures. With the festival season ahead these numbers are unlikely to drop any time soon.