Gold Hits 6-week High as Indian Diwali Seen Spurring Purchases, China Growth Worry

Gold Hits 6-week High as Indian Diwali Seen Spurring Purchases, China Growth Worry

The prices of gold held close to the highest within six weeks on signs of growing demand in India driven by festival of Diwali and the wedding season. Gold rallied above $ 1,250 an ounce on Tuesday, boosted by earnings from commodities and broadly based worries about an economic downturn China.

Bullion for immediate delivery gains as much as 0.3 percent to $ 1251.90 an ounce and was at $ 1248.64 in Singapore. And gold futures for December delivery dropped 0.2 percent to $ 1248.70 an ounce on the Commodity Exchange in New York.

A sharp outflow in exchange-traded funds backed by physical gold and average demand for Asia, however, point to a vulnerable outlook of bullion price, analysts said.

The yellow metal was lifted in the face of a stronger US dollar and on Wall Street rally after data have shown that home resales rushed to a maximum of one year in September.

“Diwali, the festival of lights held in the country for more than 800 millions of Indians tomorrow morning, is perceived as a good time to purchasing gold. A researcher CPM Group considers that the festival generates approximately a fifth of the country’s annual purchases. The imports of India fired on probably 95 metric tonnes last 15 tonnes to 20 tonnes the previous year”, All India Gems & Jewellery Trade Federation considers.

China economy increased at its slowest pace since the global financial crisis in the in Sept. quarter and hazards foul its official target for the first time in 15 years, adding to worries of the worldsecond biggest economy is quickly becoming a drag on global growth.

But, the general sentiment towards gold remained cautious. The holdings in the SPDR Gold Trust, backed exchange-traded on the world’s largest gold fund were down 1.18 percent to 751.97 tonnes on the Monday – the higher daily percentage falling in a year.

There is a weakness in the domestic market, MCX gold is trading below Rs 27,500 with 0.2 percent decline. While silver slipped 0.3 per cent to Rs 38,640.

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