Indian Physical Gold Buying Picks Up On Fall

According to a report by the Economic Times, some gold buying was induced by yesterday's fall in price.

"The $10-an ounce-fall has helped demand, I placed deals for 80-85 kgs at $1,375-1,377," said a dealer with a state-run, bullion-dealing bank in Mumbai.

The supply squeeze continues:

Bank dealers said premiums may rise to $1.65-1.75 an ounce from the current $1.40/1.45.

"Supply is still a problem, and it looks unlikely to be solved until February. If this demand trend continues, we might see further rise in premiums," said the state-run bank dealer.

The relatively tepid reaction might be strengthened by today's fall. If not, then downward price acclimatization is setting in - which means that the physical-demand cushion under gold is becoming frayed.