By Polina Devitt and Rajendra Jadhav
LONDON/MUMBAI (Reuters) – A fall in gold prices this month has attracted buyers of the metal who had been waiting for the market’s lightning rally to fade this year, industry players and analysts said.
Spot gold prices hit a record $2,790.15 per troy ounce on October 31, but have fallen about 4% so far in November in response to a Republican Party clean sweep of the US elections.
“Physical demand has increased quite a bit since October and especially after the sharp price drop in November, as there has been a change in market sentiment,” Robin Kolvenbach, co-CEO of Swiss refiner Argor-Heraeus, told Reuters.
Predictions by some analysts that gold could reach $3,000 supported the idea among parts of the market that prices, even above $2,700, were no longer super high.
“Demand for the minted products has increased quite a bit, which are mainly aimed at retail investors, but we have also seen an increase in production requests for physical gold from institutional investors,” Kolvenbach added.
Consumers in price-sensitive regions like India had a hard time dealing with gold’s rally in recent months until prices started to retreat.
The current surge in demand in India, the world’s second-biggest consumer after China and a major importer, is likely to continue in December if prices remain around current levels of $2,620, said a Mumbai-based head of a private gold-importing bank .
“Consumers have seen gold rise to around $2,790, so they are psychologically comfortable with the current price,” he said. “The only requirement is that prices must remain stable. Volatility confuses buyers and forces them to wait for a clear trend.”
While demand is weaker in China and more mixed in Southeast Asia, StoneX analyst Rhona O’Connell said there were some strategic investors who had been waiting for a proper correction.
“A fall after the election opened that window for some,” she said.
(Reporting by Polina Devitt in London and Rajendra Jadhav in Mumbai; Editing by Kirsten Donovan)
