MUMBAI (Commodity Online): It seems the golden run is over in India. With gold’s festival demand in India, the world’s largest gold consumer, peaking with Diwali on last Saturday, the yellow metal’s demand has seen a fall in the country.
Weddings take place during the festival season and jewellery forms an essential part of the dowry basket. After the Diwali, the markets have been dull and demand is quite lacklustre, with prices scouting around all-time high levels.
Technically, charts have reached the overbought zone and this, along with a demand dip in physical markets, is indication of a correction, although such a correction could be narrow.
Cash gold edged up to $1,053.10 an ounce, within sight of a lifetime high of $1,070.40 hit last week.
Gold has gone up more than 20 per cent this year, with a relative strength index of 65 indicating overbought territory.
A higher gold price attracted selling from Indonesia but premiums for the gold bars were barely changed at 60 cents to spot London prices in Singapore, suggesting the volume was small.
Maybe India is still in a holiday mood. They should be quiet this week. But consumers may come back on dips but gold may have to go down to around $1,030 for that.
India’s gold demand has shrunk this year because of volatile prices. It has imported 600 to 800 tonnes of gold each year over the past five years, but imports are set to fall to around 500 tonnes in 2009 as high prices have discouraged purchases.
Weakness in the US dollar and fears of rising inflation have powered gold prices to a record this year but analysts said a correction was possible.
