It seems that gold is being replaced with cash as a safe haven, else there is no reason why gold prices should fall 17.48 per cent within just a fortnight. If gold buying in India on the Pushya Nakshatra yesterday was lacklustre due to high price, buyers have one more occasion, Dhanteras, to buy gold as the prices have come down. But will they buy? Gold was at its all-time high of Rs 14,105 on October 10 and on Thuresday it closed at Rs 11,640 in Mumbai. Gold fell Rs 515 from yesterday’s level. Price fall in India is slightly lower not because Indi-ans are buying gold but bec-ause of the fall in value of the rupee that makes imports of the yellow metal costlier. The rupee fell 2.79 per cent in a fortnight. Even gold exchange traded funds have lost 14.68 per cent during this period. A combination of factors caused in the fall. Deleveraging and need for cash has resulted in huge selling in gold across the world. Gold as an asset class is not behaving differently. It is falling along with other assets. Apart from selling for generating cash, commodity index funds are sellers. When there is selling in index funds they have to sell gold also in the ratio of its weightage in the index. The sharp drop in crude oil prices has also eased the inflation risk and hence no demand for hedging that risk in gold. Gold mines are selling gold as due to liquidity crises the world over, banks are not providing finance to them against their forward delivery that is gold to be produced in future. Gold remains in demand when there is geo-political risk. Perception in international market now is that democrats will come in power next month in the US and hence geo-political risk will come down. Biren Vakil of Paradigm Commodities said, “The dollar and yen are only bullish in this market and every thing else is falling.”

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