Gold Picks Up as Platinum Falls Back on Profit Taking

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...it is particularly interesting that gold futures prices in India, the world's largest consumer for gold for jewellery, have reached new highs, suggesting that the adverse market sentiment, which has cut demand drastically there over the last few months, is already being discounted in local markets.

Yesterday saw mixed fortunes in the precious metals sector. The gold price rose sharply back into the $920+ level after languishing in and around $900-$910 for almost a week, while the recent surge in the platinum price was halted in what analysts put down to profit taking in investment metal. Silver was strong too in line with the gold price.

...it is particularly interesting that gold futures prices in India, the world's largest consumer for gold for jewellery, have reached new highs, suggesting that the adverse market sentiment, which has cut demand drastically there over the last few months, is already being discounted in local markets.

Athough the supply/demand equation can underpin the gold price, and a further anticipated sharp fall in South African production seems inevitable this year, it is still gold's sometimes derided monetary usage which really calls the tune. Whatever happens this year with Central Bank and IMF sales, there is evidence that there are other countries out there keen to snap this gold up to reduce their reliance on the US dollar in their foreign exchange holdings. Furthermore as long as nervousness persists in financial markets - and there's certainly no sign of this ending soon - investment demand in the form of ETFs is likely to remain strong with purchases outweighing liquidations.

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