A lot of the fear has been taken out of the market, temporarily at least. The French and Russian got what they wanted out of the G20. Everyone's happy! Many believe the market may have bottomed and the "bushfire" has done its worst. The ordered IMF gold sales will likely only have a temporary effect on the gold price if indeed they are ratified later this year. They would want to maximise their return and either dribble it out or sell in one or two lumps to the Chinese, Russians or others. It makes no sense just to dump it. In the meantime the mints are working flat out and presumably gold in the ground is getting scarcer! I would imagine the gold price will normalise to the point where the Indians start buying their normal quantities again. What will Indians happily pay for gold? 40,000 rupees an ounce? 42,500? 50,000 rupees is evidently too much to stomach at present. It also depends to a great extent on just how much physical gold is really available now. Even with current Indian reluctance to buy significant quantities of gold at 50,00 rupees an ounce, an inadequacy of supply of physical gold could still keep prices above $US900 and perhaps as high as $US1,000 and more. No doubt we will know in good time!
