Friday, 20th January 2006 (3881 views)

Consumer demand for gold rocketed following a crash in international market prices yesterday, reports the India Times.

Gold for immediate delivery fell to a low of £306 an ounce in London, before bouncing back slightly to £308.

Meanwhile Indian values fell by Rs 175 to Rs 8,005 per 10 gm in Kolkata, while pure gold fell to a value of Rs 7995 per 10 gm.

Industry experts believe that rises in demand will increase steadily over the next few days following further drops in prices.

A spokesman for the Bombay Bullion Association told India Times: "Physical buyers have returned to market on the back of sliding prices, but they are placing orders mainly for their near-term requirements."

It consequently appears that most of the demand is coming from buyers looking for small, short-term investments under the hope that prices will slip further.

Despite this, analysts believe that prices will rise again based on the oil price inflation and tensions between West Asia and Nigeria.

The current movements in gold value have surprised experts as gold normally moves in the opposite direction to the US dollar but has recently followed its downward spiral.

 

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