India's rising gold demand stutters but probably temporarily

Yesterday’s price recovery for gold from its near $800 low point caused a pause in the demand resurgence for gold in India, but there are plenty of orders for the yellow metal in the $805-810 range.

MUMBAI (Reuters) - 

India's gold demand paused on Wednesday as prices inched up tracking an overseas rebound, but dealers said many buyers waited for lower levels as retail demand had already set in.

"Today demand has halted, but there are plenty of orders placed in advance for $805-$810 an ounce levels," said Manoj Agarwal of Om Commodity Trading Co, a large wholesaler in Ahmedabad.

Foreign gold that guides the local market edged up after an eight-month low the previous day, as the dollar retreated from its highs against the euro, and crude oil prices steadied.

Gold generally moves in tandem with crude oil as the latter signals inflation, while the metal negates it. But the metal has an inverse relation with the dollar as the two compete for funds.

Dealers said supply problems continued to persist with a delay of up to one week for delivery after the heavy demand that started last week.

"The delivery time is four to five days," said D.P. Naresh of Micro International, a large trader in Bangalore.

The local market was quoting gold a few dollars higher per ounce than the banks owing to the scarcity, Agarwal said.

Raksha Bandhan festival on Saturday is expected to see high jewellery sales, particularly in north India, and would also mark the start of the busy season with more festivals to follow in the next few months.

© Thomson Reuters 2008 All rights reserved

SUBSCRIBE to Mineweb.com's free daily newsletter now.

Print story      Email story      Subscribe to free newsletter
Related Links ARTILCES:  Light at the end of the gold tunnel – India buying again?  Record gold demand by value in 2Q – World Gold Council  Gold now in bear market by definition as it tests $800   Gold: surviving oil and the dollar?  OTHER PAGES:  GOLD NEWS ASIA

Back