With the fall in the international gold prices, the price of ten tola (TT) bar (biscuit) has slipped fell to Rs 54,000 from the last month's peak of Rs 58,000. Silver too was quoted lower at around Rs 7,950 per kg from around Rs 8,000 per kg earlier.

This decline in prices and sudden change in international gold prices on the New York's Comex had hit a section of bullion punters very hard. These players have returned to dealing in physical trade giving indication of improved traders sentiment as well, more so with the onset of the festivals.

However, traders say festival demand is just 35 per cent of what it was last year. Consumer buying is expected to improve gradually.

One of the major indication of improved trader sentiment resulting in offtake of physical gold against options trading on the Comex (New York) during the earlier part of the year, is the recent report of a single deal of 5,000 TT bar, the first in many months. The fall in the global gold price during the earlier part of the year had induced some consumer demand giving the much-needed respite to the physical trade that was passing through one of the worst ever phase since last one year.

"Having burnt their fingers in the Comex speculation, some gold importers might have realised that the cash trade is their bread and butter," said a leading trader. "With the global price dipping once again below the $300 per troy ounce level, some trade buying has emerged once again."

Despite this upbeat mood, a section of traders feel, the Divali demand is almost absent. In the wake of draught in the Gujarat and Rajasthan, the rural demand has remained lackluster, he said.However, the demand in the premium segment and urban areas is relatively good, said a trader.

On the other hand, demand for silver has remain better then gold, as its price has remained almost stable as compared to gold. Silver is preferred by consumers in the lower income group prefers silver being a affordable precious metal. Silver offtake volume in Ahmedabad has remained around 700 kg per day, while for the entire Gujarat this could be around 3,000 kg per day, feels a bullion analyst.

Meanwhile, police authorities have blocked a gold bar cargo worth Rs 3-3.5 crore, which generated furore among the local trading community.

According to Manoj Bhimani a leading importer, the police department had some time ago held the cargoe, saying the goods are smuggled. "If the goods are smuggled why does not the police authorities not seize it?", Bhimani asked.

The said cargo is said to have been sold by one of the leading bullion bank and therefore, everything is legal, traders aver. The importer who had imported the consignment has recorded turnover of Rs 800 crore. The spot gold price at New York Commodity Exchange fell further to $285 per troy ounce, but recovered to $298 due to short covering at lower levels. The price almost retraced 61 percent and $296.50 is seen as a crucial support, breach of which could trigger stop loss selling.

Currently, the gold market is passing through a consolidation phase. Price are ruling above 12, 48 and 100 day moving average of $289.50, $295.50 and $279 respectively. In the weekly charts 12 week average comes at $289.50 which could act as a crucial support, while the 200 week moving average of $300 is seen as a strong resistances.Weekly close above $300 would strengthen technical structure. Outlook is still bullish for the medium and long term till prices hold above $295 level.