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Gold may weaken as Asian festive season ends

FXStreet (Mumbai) - The demand for the physical Gold from India and China has increased in recent days as bargain hunters entered at lower levels ahead of the festive season.

Gold demand from India increased in last the couple of weeks ahead of the Diwali festival, country’s biggest Gold buying festival. Earlier this month, gold hit a low of USD 1,183.27/Oz, its lowest level this year. Since then, prices have recovered to hit a high of USD 1255 this week tracking the weakness in the equity markets and due to the rise in demand from Asia.

Singapore-based retailer GoldSilver Central witnessed a 30% increase in gold sales by value during the Indian festivities from the previous year. Meanwhile, demand from China picked up after Gold had fallen below USD 1230/Oz.

However, the India demand is priced-in by now and thus, Gold prices may decline sharply in the days ahead in case the equity markets continue to inch higher.

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