By Manasee S. Gokhale
The Chinese are right behind India in gold consumption as their gold mining and import activities are going full throttle. China has recently tied up with several international miners to extract its huge Gold reserves. This is a part of a plan to boost output by 30 percent each year through 2012.

China may overtake India as the world’s top gold consumer this year, according to the World Gold Council. China’s strategy is to continue to grow its portfolio of quality assets and capitalize on its leading position in China’s growing gold industry.

India’s demand has drastically fallen, thanks to the high prices. The sensitive Indian consumer has absolutely refused to buy in these high prices and imports have fallen to an all time low not seen since decades.

Indian Rupee woes
The partially convertible currency weakened again to the most in a week on concern slides in regional shares will prompt global funds to favour safer bets than emerging-market assets. The rupee declined 0.3 percent to 48.755 per dollar.

Global Markets
Is the worst finally over? With the latest good news streaming in, many are asking the obvious question, is the worst over now and when will we begin climbing again? All this when U.S. consumer confidence climbed more than forecast and national home prices increased for the first time in three years, signaling government efforts to right the world’s biggest economy
are starting to pay off.

U.S. stocks also rose as better-than- estimated consumer confidence and home prices bolstered optimism the recession is ending. Treasuries gained as crude oil fell more than $2 a barrel to the lowest price in a week.

The Gold story
Gold in New York opened at $947.50/948.50 an ounce and then rallied as the USD retreated, to reach a peak. Gold then went in the opposite direction of equities as they rallied on the back of positive economic data and the metal fell. In the latter session, gold traded lightly and in a narrow range. Gold was then well bid and slipped to a low to finally settle at $943.75/944.75 an ounce.

Silver in New York opened at $14.28/14.31 an ounce and then followed gold’s path on the back of stronger oil prices and a weaker dollar. Investors took profit and pulled the metal lower to reach an intraday low. However, good bids carried the metal from its lows and the buying continued. In the final lap, the metal retreated from its highs as oil prices tumbled and finally closed at $14.31/14.34 an ounce.

Manasee S. Gokhale is an economist with NCDEX, India