Indian buyers hold back as shine comes off gold
Blame poor rains or a lack of weddings, but Indians, for whom gold is the traditional investment of choice, aren't rushing to buy bullion after this week's sharp sell-off.
India and China are the world's top gold buyers and, after massive selling on the Shanghai Gold Exchange on Monday helped drive down gold prices by 4pc to a five-year low, traders hoped demand would perk up in India, or elsewhere in Asia.
The last big slide in gold prices - a 13pc drop in just two consecutive trading days in April 2013 - prompted weeks of long queues of Indians outside gold showrooms.
Not this time. India's gold appetite - it accounts for more than a fifth of global demand - remains sluggish, with only modest local premiums to the global spot benchmark. "That's really a bearish sign, when the main consuming region remains on the sidelines after such a price drop to a multi-year low," Commerzbank senior oil analyst Carsten Fritsch told the Reuters Global Gold Forum yesterday. "Who's going to buy gold if not the Asians?"
The gold price dropped on Monday to $1,088.05 an ounce, its lowest since March 2010.