But not this time, say dealers and jewellers, who report that consumers across the world are reluctant to buy even after a price decline of almost $200 in 10 days as investors rushed to liquidate their gold in anticipation of the Federal Reserve's scaling back its bond-buying stimulus since November 2008. The failure of everyday consumers to rush to gold's rescue, as they did two months ago, suggests that prices may have much further to fall as investors rush to liquidate, analysts say.
In India, soaring gold import levies and a record low in the rupee against the dollar following a 40% drop since 2011 dealt a double whammy to any hopes of strong physical demand in the second half of this year. "My June import figures are dismal," said Daman Prakash Rathod, director with Chennai wholesaler MNC Bullion.
"It's difficult to garner capital for paying cash to importing agencies to get the stocks," Rathod said. While in dollar terms gold is now more than $100 an ounce below its April low, gold futures are still 3% above their cheapest that month, further discouraging price-sensitive consumers.
Concerns over bank liquidity in China, which rocked stock markets in Shanghai, may also be weighing on demand in the short term, analysts said, as buyers worry about the impact of a slowdown in China and a possible credit crunch.