“The lower taxes are part of an effort to curb gold smuggling into India. A problem that has become rampant since the government stepped up import duties earlier this year,” according to OilPrice.com. “If the measure does pass, it should help lift gold demand across India. Especially given that rumors about potential moves by the government to restrict gold ownership appear to have been overblown.”

Emerging market demand for gold has not picked up yet. For instance, China has shown little demand, with the Shanghai Gold Exchange seeing little growth in volume. While the higher prices may have deterred Asian buyers, demand could pick up if prices persist in going higher, analysts said.

Recently, “the Singapore Exchange unveiled its first sharia-compliant gold futures contract. Which is designed to meet all requirements for Islamic finance — allowing buyers in the Muslim world to get into this market,” reports OilPrice.com. “That comes after Bahrain’s Accounting and Auditing Organization for Islamic Financial Institutions released new guidelines last month on gold and silver buying for Islamic investors. Those rules now bring the clarity needed for Muslim buyers to get into precious metals. And allow sellers like the Singapore Exchange to tailor products to this market, potentially opening up a lot of new buying.”

For more information on the gold market, visit our gold category.

Tom Lydon’s clients own shares of GLD.