Oil prices have already surged past the $55 a barrel mark. With a weakening dollar, there has been an upward movement in bullion prices. But what is, perhaps, of even greater concern is the fact that this gold price surge has also been a fall-out of prevailing political uncertainty not only in West Asia, particularly Iraq, but within the US as well. With the US presidential polls just a week away, it is already being debated in the country what a Bush or a Kerry victory will mean for gold prices. In fact, it is feared that a victory for Bush may mean greater geopolitical instability which, in turn, may increase oil prices further. President George Bush may be very proud of his war on terror. But its a war that has had a debilitating effect on the world economy which has seen a decline in oil production and an upward spiral in both oil and bullion prices.
India too has not been left untouched by the global economic scenario. Gold prices here too have gone up from Rs 5,965 per 10 grams to over Rs 6,300 an increase of over Rs 300 in the last one month. Other than the rise in bullion prices, heavy buying by stockists too has seen gold prices here touch an all-time high. With India being the highest consumer of gold in the world, this upward trend will certainly prove a dampener for the average Indian already in festive mode. Neither do the surging gold prices augur well for the bullion business. Already, there is no gold rush as is the trend in the run-up to Diwali. And gold merchants are complaining that the number of customers has declined. Gold, for now, has lost its glitter for the Indian buyer.