Mumbai, Oct. 21
GOLD has run into an aggressive stale long liquidation, reversing its rebound above $470 an ounce made earlier this week. By now, the yellow metal has lost almost $10/oz. In the early trade today, it was ruling at $462.35/oz.
Experts said fund liquidation came as no surprise because of the massive speculative length in the market. Technicals also supported a price correction, it is argued. Physical demand has been subdued.
As for India - the world's largest importer - there is little evidence of a big surge in rural incomes this season because of low agricultural growth in the kharif season. In addition, weakening of the rupee in recent days - the currency crossed Rs 45 to the dollar - has made imports so much more expensive.
It is widely believed that the price elasticity of demand is finally catching up with this precious metal.
Anecdotal evidence from Asian region suggests that buyers have turned wary and many are restricting or postponing purchases. High prices are also seen encouraging a lot of scrap recycling.
Experts said the metal might be able to hold at around $460/oz at which level there could be some re-emergence of buying interest.