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From Staff Reports
Gold imports to India, the world’s biggest gold consumer, have fallen for the second straight month.
According to the Bombay Bullion Association, November purchases fell drastically from 59 metric tons last year to 12 tons during the same month this year. Likewise, year-over-year purchases for October fell from 68 tons last year to 14 tons this year.
The declines are especially alarming considering the last three months of the year are normally the peak gold season for jewelers. Those months are marked with a large amount of Indian weddings and also Diwali, the Festival of Lights, spread out over several days.
Some analysts reason that gold’s price was just too high for reputably frugal India. Gold hit a 28-year high last month at $850 an ounce, capping a nearly 30% gain in three months. It has since dipped below the $800 level, to close at $794 an ounce Friday.
“This is a price sensitive market and people are willing to wait for prices to dip before they make purchases,” Si Kannan, analyst at Kotak Commodity Services Ltd. in Mumbai, told Bloomberg. “Also a surge in scrap sales dented demand.”
Investors shouldn’t ignore the message here: Glittery India says gold is too expensive for their weddings and holidays.
But they should also be mindful that gold’s price dip opens a window for Contrarian investors.
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News and Related Story Links:
- Bloomberg News:
- Money Morning:
Breather or Bear Market? Gold Bulls Stumble in Trading Yesterday.
- Resource Investor:
Interview: Bombay Bullion Association Chief.
- Web Site:
Kotak Commodity Services Ltd.