Selling By Stockists Pushes Gold Down In Indian Market

According to a report by the Times of India, gold dropped because of heavy selling by stockists.

Marketmen said sustained selling by stockists in tandem with the weakening trend in international markets mainly weighed on the trading sentiment here. They highlighted the fact that even demand for the ongoing marriage season failed to check the falling prices.

Still, as an earlier report by the Economic Times relates, there was physical buying:

Indian gold jewellers rushed to replenish stocks ahead of religious festivals and other physical buyers in Asia snapped up bullion after prices fell to their weakest in more than a month, dealers said on Wednesday....

Gold buying in main consumer India resurfaced after a gap of nearly a month as dealers stocked for a second round of religious festivals starting in August, when demand for bullion picks up and the wedding season starts.

"The initial reaction for the dip was good but they are looking for more correction. I may have imported about a tonne since 3-4 days," said Pinakin Vyas, assistant vice-president-treasury with IndusInd Bank, a gold importer. Jewellery is the most common gift during religious events and weddings in India.

"They don't want to miss this chance of a dip before festivals. I placed indents to import half-a-tonne of gold over the past 3 days," said a senior official with a state-run bullion dealing bank, which imported about 40 tonnes last fiscal year.

The resultant picture is mixed, with one kind of buyer acting in discord with another.