Crude Oil, Dollar give Gold a rude jolt

January 06, 2009

Commodity Online
NEW DELHI: Even as the world is rushing to embrace gold in a big way due to the recessionary trend across the globe, the villain playing the spoilsport is always dollar and crude.

When dollar and crude prices soar in global markets, the yellow metal gets hit. This phenomenon has been there since years.

This week also crude and dollar played the spoilsport when the gold prices touched around Rs 13,500 per 10 gm.

On Monday crude prices touched $47 per barrel in the global market. This led to a fall in bullion prices, which came down by around Rs 120 per 10 gm.

In Mumbai, standard and pure gold moved down to Rs 13,425.

Another factor dragging down the gold prices is a fall in demand for gold jewellery following the recession and high prices.

In India, the marriage season has not helped lift the demand much. The high prices also kept people away from the yellow metal.

However, one thing which helped boost the gold sales is that at the time of crisis Indians normally bank on gold. That is traditional wisdom. So investors always park their money in gold, if there is a crisis.

Buyers are reluctant to make any deal at the current price because it is still unaffordable for people.

Buying activity is expected to pick up if prices fall below Rs 12,000. Bullion market had seen hectic activity when prices hovered between Rs 11,500 and Rs 12,500 per 10 gm during August-September period.

In international markets, gold slid more than 3% on fund selling after the Euro lost ground against the dollar.

In London, spot gold after touching an intraday low of $843.50, quoted at $851.65/853.65 an ounce, but still down from $873.20 in New York on Friday. In futures, US gold for February delivery lost $26.60 to $852.90 an ounce on Monday on the Comex division of the New York Mercantile Exchange.

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