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Yesterday the Indian gold price rose 30 rupees to hit a new record high of 29,296 rupees per 10 grams. But rising prices are not scaring investors away - Indians keep transferring their funds to precious metals. The silver price also benefited from this trend, rising 150 rupees to consolidate at 58.000 rupees per kilo.
During the five days of Diwali, the Indian festival of light, gold and silver price registered record sales. But buying interest has not declined. Now that the wedding season has started, Indian gold dealers and jewellers continue to sell large quantities of precious metals. Furthermore, in recent weeks Indian investors have been withdrawing large sums of capital from bond and investment funds, since they expect that in coming weeks stock markets will continue to be under sales pressure. Large amounts of this capital is obviously flowing into the gold and silver markets. ...
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Mr Unobtanium,
I'm guessing you're not an FX trader.....haha. Dude, currencies trade against each other and therefore it's possible (and happens every day) for the price of gold (or any other commodity) to go down in US dollars but go up in another currency. All that has to happen is for the currency in question to fall against the US dollar (in percentage terms) more than gold falls against the US dollar..
Cheers, ID
Welcome and glad you found your way here.And BTW, welcome to the forum, it is nice to have you aboard.
Thanks! I'm always looking for places to talk PMs. Just ditched my old place (got sick of the fighting and name-calling due to differences of opinion). I want to hang out at a place where people can learn and trade ideas and name calling is kept to a minimum.
Cheers
A sharp drop in the value of the rupee against the US dollar in early November helped to moderate Indian demand for gold and silver during the tailend of the Diwali festival of light, according to new market analysis.
... In addition to this recent rise in precious metal prices, operators and investors are less enthusiastic about buying as the outlook on global economic growth keeps getting worse. Due to the devaluation of the rupee recently many investors have withdrawn their capital from Indian stock markets, causing stock prices to fall. The European banking and sovereign debt crisis also gave foreign investors further reasons to repatriate their capital. As a consecuence, India's stock markets have been under pressure.
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In this eventuality, it would be tough for the emerging markets not to suffer from a collapse in demand from the developed world. The fallout from the bursting of the Chinese real estate bubble could also cause serious problems for the global economy. A slight decrease of Asian demand could cause metal prices to drop further, thus offering investors excellent buying opportunities at an attractive price level. ...
Looks like PMs are going to the woodshed right now. I don't think the dollar going up in that measure is the reason - they are going down relative to oil too. My system would have you sell your non core holdings at this point, at a loss - it happens. I'm not sure I will this time. Looks like someone had to raise more cash than people wanted gold right then or something like that. That's usually "transitory"
That Indian households hold the yellow metal close to their heart is a known fact. A new report indicates that the gold close to every Indian's heart and in most homes could be well over $950 billion, which in turn is around 50% of the country's GDP in dollar terms.
Gold consumption is part of India's culture and tradition. At $950 billion, the hoarding represents 11% of the global stock, the report has said, making India one of the largest private gold holders in the world.
Indian households hold 18,000 tonnes of gold, says global research firm Macquarie. In a report, the firm has noted that bars, coins and other modes of retail investment during 2011 have also reported a 90% increase, which are all testimony to the untamed demand for the yellow metal in India.
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WORRIED ECONOMISTS
However, the Indian mentality to hold on to their precious tonnage has got many economists worried. ...
India's yellow metal fetish is threatening to take the shine off its fast paced economic growth, with many economists saying that financial markets are losing out on funds that have instead been spent on gold.
"The 18,000 tonnes of metal in Indian households is almost double the gold reserves maintained by the US Federal Reserve. And it just sits idle in family vaults across India as ornaments, bars and coins,'' said an analyst with a brokerage firm.
Y Venugopal Reddy, a former governor of the India's central bank, the Reserve Bank of India, has said that it has created an incurable `drain on savings', threatening to hobble economic progress. As gold fever grips most households in India, the country's household savings rate has plummeted in the financial year that ended on March 31 to 9.7% of GDP, compared with 12.1% in the previous fiscal year.
Moreover, with the central bank raising interest rates more than 12 times since March last year to combat double digit inflation, domestic deposits and fixed income investments have been looking increasingly vulnerable. The Bombay Stock Exchange benchmark Sensex has also fallen more than 16% till September and since the start of 2011.
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Record crowds during India’s most important celebration on Sunday could potentially be positive news for the gold market.
Sunday, millions of people in India and around the world celebrated Diwali, the Hindu festival of light. The five-day festival is an important event for the global gold market as India is one of the world’s top gold-consuming nations and the precious metal is often given as a gift during the holidays.
Even before the record turnouts throughout India, analysts were expecting this year’s celebration to have a solid impact on gold demand.
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India's October gold imports surged 60% from a year earlier to a 31-month high as a drop in prices ahead of a key festival prompted jewellers to ramp up purchases, a government source said on Monday.
Higher imports by the world's second-biggest bullion consumer could support benchmark gold prices XAU=, but may also widen India's trade deficit and put pressure on the ailing rupee INR=D4.
India imported 123 metric tons of gold in October, compared with 77 tons a year earlier, the source said, declining to be named as he is not authorised to speak to the media.
The average monthly imports in October in the past decade were around 66 tons.
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Physical gold dealers in India were forced to offer steeper discounts this week as record high prices accelerated a post-festival slowdown in demand, with the rise in local prices hurting activity in other Asian hubs as well.
Indian dealers offered discounts of up to $9 an ounce over official domestic prices inclusive of 15% import and 3% sales levies up from the last week’s discounts of $6.
Demand was good for a few days after the Diwali festival last month, but rising prices have brought the market to a standstill, a New Delhi-based bullion dealer said.
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It doesn't look like thatLower imports by India, the world's second biggest consumer of the precious metal, could limit a rally in global prices
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