The Hindu Business Line : Demand for gold

This is with reference to "Farm output recovery may drive demand up for gold" (Business Line, September 9). The article deserves praise for its balanced view. The article has rightly analysed that price remains the main driving force behind the increased import of gold. The farm output cannot decide the greater purchase/demand, and has to be supported by price. The Indian farmer remains price sensitive and will invest his hard earned income only if prices are supported by fundamentals. Internationally, there is no demand for physical gold, only big funds are driving gold high by promoting speculative buying of paper gold on Comex, LMBA, and so on. Thus, the current price rise is due to producer buyback, heavy funds buying future contracts and options in anticipation of huge speculative profit.

Daman Prakash

Chennai

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