Some of the sluggishness may be down to weak monsoon, which has meant that farmers in India's rural areas, who account for nearly two-thirds of domestic gold demand, don't have the ready cash to buy gold at the moment.
Also, playing spoilsport, as far as the yellow metal is concerned, is the fact that this is not the season for festivities or weddings.
But there're also a lot of prospective buyers who are staying away in the hope that prices will fall further. For them, here's what the experts are saying
My view is that once the US rate hikes are announced, it could signal a turnaround for gold. Also, current prices are around or below the cost of production for many mines in the world. This could be provide fundamental strength going forward. I view this as an opportunity for long-term investment in gold. That said, there is scope for further downside in the short-term and timing the market while doing bottom picking is tough, - Gnanasekar Thiagarajan, Sify.com's expert on gold in his analysis
Gold prices are projected to fall 12%, largely driven by expectations of a rising dollar and tightening in US monetary policy. Investment demand will continue to be a key driver to precious metal prices going forward. Downside risks include stronger-than-expected monetary tightening and dollar strength, while significantly weaker US growth (and the ramifications for the dollar and monetary policy) generate upside risk, - The World Bank in its quarterly Commodity Markets Outlook report published in July 2015
As far as India goes, a big negative for gold is diminished rural purchasing power. Given that an estimated two-thirds of India’s gold demand comes from rural areas, lower crop prices and a not-so-good monsoon so far is not good news for bullion traders and jewellers, - Leading business journalist Harish Damodran on Why is gold falling, and where is it headed
The risks are clearly skewed to the downside in this environment. There is a probability that the market trades below $1000 this year ((it is around $1100 at the moment) given our broader commodity view. With the more positive outlook on the dollar, and with debasement risk starting to fade, the demand to use gold as a diversifying asset against the US dollar becomes less and less important, - Jeff Currie, head of commodities research at Goldman Sachs, who first suggested selling gold in 2013
BDST: 1618 HRS, JULY 28, 2015
Edited by: Sharmina Islam, Lifestyle Editor
