Apropos, ‘Rising Gold prices draw expert caution’, (April 24).
The Exchange rate volatility feeds into institutional demand for bullion. Gold at these levels will impact buying decisions in traditional retail markets such as India.
Demand for bullion is also likely to stay strong from central banks as they try to diversify reserves and reduce dependence on the still-mighty dollar.
The bullion rally has a deeper impact on Indian consumers’ attitude towards gold, reinforcing the metal’s appeal as a hedge.
This weighs in on the traditional preference for unproductive physical savings.
In India’s case, this also amounts to the export of a significant portion of household savings.
The broader impact is a slower formalisation of the economy.
Gold as an asset class delivers relatively low returns in the long run, except during periods of high economic volatility such as now. This affects the generation and dispersion of wealth in the country.
N Sadhasiva Reddy
Bengaluru
Security worries
Apropos the article ‘A tricky game for US allies’ (April 24), the agenda of protecting domestic industries and raising government revenues, US President Donald Trump has not made any distinction between friends and foes, while “imposing” reciprocal tariffs.
This has put the US allies in an embarrassing situation, the only saving grace being the 90-day reprieve announced for all nations except China.
US allies have benefitted greatly from the ‘military shield’ provided by the US and Trump cannot be faulted for asking the allies to contribute more. But linking tariffs with the security issue puts pressure on the allies and Trump would do well to deal tariffs and security as separate issues.
The current trade war has already created tensions between the US and its allies and linking tariffs with security could push some US allies towards China, which can hit US strategic interests.
Kosaraju Chandramouli
Hyderabad
Published on April 24, 2025
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