After the sharp fall in prices over the last month, analysts say physical demand for gold appears to have picked up – which seems to be helping the market to stabilize.
JPMorgan analyst Michael Jansen calls the demand "robust," and says it’s keeping gold strong, despite continued selling from trend-following market players and funds that feel the dollar has been put in a base and inflation risks are lifting. He says demand has tightened in parts of the world, including the Middle East and India.
There is no real hard data to measure when physical demand picks up. Experts say the market relies on anecdotal evidence from those in the metals business. Evidence eventually emerges from organizations such as the World Gold Council, which releases a quarterly report on demand trends.
The market is approaching the autumn sales period, when a series of gift-giving holidays occur in the key consuming nation of India. Buying will also pick up in the U.S and other nations, as the jewelry industry gets ready for the holiday shopping season.
The physical demand for gold is an important barometer for analysts. They say futures markets see periods of selling when fundamentals may, in fact, have not changed -- or when a market such as gold simply follows the lead of other commodities.
– By Ed Coury, Senior Editor and Midwest Bureau Chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950
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