By Michelle Smith — Exclusive to Gold Investing News
National news put pressure on the gold markets last week. India and China, th e world's top gold consumers, both received blame for inciting demand fear. India's contribution came in the form of gold-related protests, while China's damper on the market was connected to manufacturing data that reignited fears of an economic slowdown. Added to these events was news of a military takeover in Mali, Africa's third-largest gold producer. Last week began with, and saw the continuation of, a gold strike in India that involved jewelers and bullion dealers closing their shops and staging demonstrations. India's gold industry outrage is the result of government attempts to steer the nation's cash away from gold using tax increases. India has a swelling current account deficit, but its citizens have a penchant for gold, which the government recognizes as exacerbating the problem. The Economic Advisory Council (EAC) calculated that gold imports up to January of this year had reached $50 billion, and are expected to be $58 billion for fiscal year 2011/12, which ends on March 31. Gold, seen by most Indians as an investment, is increasingly viewed by the government as an unproductive use of financial resources. For the most part, it's purchased - consuming cash - and held by its owners, thereby failing to provide the nation with any economic benefits. “There is clearly [the] need to examine and rectify the situation so that household savings come back to the organized financial market and are used in the creation of the nation's modern infrastructure and industrial base,” an EAC report says. The Union budget for 2012/13 therefore calls for a one percent excise duty on unbranded gold jewelry and a doubling of the customs duty on gold imports. The move follows a change in duty structure earlier this year that made gold more expensive. Sheel Chand Jain, President of the All India Sarafa Association, reportedly drafted a letter to officials pointing out that a similar measure had been attempted with regards to jewelry in 1981-82 and had to be withdrawn.