Wednesday, May 26, 2010

Indian Gold Demand Still Weak In Face Of Rising Prices

The price of gold in rupees hit another record. Given that prices are high, it's not too surprising that Indian gold demand is weak for the second day in a row.
"There is no demand today as prices are at a high, even yesterday was equally bad," said a dealer with a state-run bullion dealing bank in Mumbai....

"Markets could get re-activated if prices fall to 17,000 rupees," [a drop of more than 8% in rupee terms,] said another private bank dealer. However a strong rupee, which made the dollar-quoted asset cheaper, aided sentiment, they added.

Unless the rupee shows some strength, it's not very likely that the price will fall that far. At least, not as far as I can see.

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