From Money Beat:
Gold’s tumble to near three-year-lows has yet to prompt Indians to rush to their nearest jewelry shops, as the rupee’s decline has largely offset the slump in gold prices.*Not by me, the Doxology should be sung to Laura Clarke, a writer at MoneyBeat whom I highlighted on Tuesday, before the price collapsed:
“There is no major buying. The rupee has weakened so much that it has hardly made a dent in Indian prices,” said Suresh Hundia, a leading bullion dealer and former president of the Bombay Bullion Association.
This is a stark contrast to the reaction in April, when Indians lined up outside jewelry shops in the days after gold’s record two-day plunge to just above $1,300 an ounce, just ahead of the peak wedding season and Akshaya Trithiya, considered by Indians to be one of the most auspicious occasions for buying gold.
Global gold prices tumbled 6.4% on Thursday to below $1,300 an ounce as investors, who had sent gold to record highs following the financial crisis, dumped the precious metal after U.S. Federal Reserve Chairman Ben Bernanke said the Fed will likely begin winding down its bond buying later this year. Earlier indications that the Fed would do so drove U.S. bond yields higher in recent weeks, making gold less attractive as a hedge against inflation.
Still, Gold prices in India remain 4%-5% above those seen in April because of the rupee’s slide to a record low against the U.S. dollar, and an increase in the import tax on gold from 6% to 8%.
India is the world’s largest consumer and net importer of gold. Its May imports surged to around 162 metric tons, nearly double the average, according to government estimates....MORE
...Here's a very smart comment on tests of support:$1293.80 last after trading as low as $1268.70.
...Meanwhile, physical gold buyers who picked gold up from its April low may not now be in the position to do this to the same extent should the price fall again....
