By Jon Nadler
Following the worst weekly rout in over two months, gold prices enjoyed a sunny start to the new week and bounced as high as $810 on the back of a slightly weaker dollar and a near $2 gain in crude oil values. A 300 + point Nikkei rally helped matters a bit as well, as signs of emerging risk appetite encouraged spec traders. The greenback was trading at 82.42 on the index, while oil was up $1.83 at $73.68 per barrel.

The weekend's Indian demand remained sluggish as locals await further declines for the yellow metal. Meanwhile, ill-informed market 'observers' still root for some kind of Diwali-related miracle for bullion. The same was not the case with silver however, which Indian buyers snapped up in very nice quantities since last Friday's dip to well under $10 an ounce.

New York spot dealings opened with a $10 gain this morning, quoted at $793 per ounce as participants observed some easing in the flight to, and preference for, staying in the safe shelter that the dollar has afforded them during the recent violent market storms. Silver was ahead by 21 cents at the open, trading at $9.56 per ounce. Platinum gained $14 to $871 and palladium added $4 to $175 per ounce.

Mr. Bernanke's speech in front of the House Budget Committee will offer plenty of distraction later this morning. LIBOR watch remains in full 'up periscope' mode. Swiss Bank UBS meanwhile, has cut its metals forecasts by $125-$175 for gold (seen as trading at $800 in one and three months) and by a lot more than that for platinum and palladium (expected to trade at $950 and $190 short-term) based on the automotive sector's current woes. Net long gold positions on Comex fell 4% in the tracking week ending last Thursday. Longs are still ahead by 106K contracts.

OPEC was planning to cut output of black gold in the face of waning demand and price equations pointing towards $50 per barrel. China's growth slowed to a rate (9%) not seen in five years, as the US consumer's formerly reliable spending spree not only slowed to a snail's pace, but that very consumer was starting to act like a snail whose shell has just been disturbed. Nobel Laureate Paul Krugman thus sees a 'nasty' US recession taking place. A Bush administration official sees 'regions in the US in recession' at this time. Sure, like the region that starts in Ozette WA, and ends in, say Lubec, Maine..

Very likely, the consumer recession started somewhat earlier and is now fueling an adverse loop that has spread to the producers of 'stuff' for them to buy. Americans are very likely turning into savers at this point and will make life miserable for any niche that caters to their consumption patterns. All but critical ones, that is. Not so sure we can count gold jewelry among those 'critical' consumption items however. Mr. Claus may once again take flight with a very light conveyance this winter. Meanwhile, over in India, it is not the new fondness for saving money that is keeping women out of gold shops. It is shifting cultural and aesthetic preferences. Zeenews India reports:

"India may be the largest hoarder of the precious metal in its manufactured form, but women these days, be it Diwali or otherwise are giving it a pass and looking for alternatives.

As Diwali approaches and men head to buy the loudest and brightest firecracker, women have always headed to the neighbourhood jeweller. The occasion has been used to buy gold for not only investment sake, but also to give an edge to their attire. But after all these years, the popularity of gold among the ladies seems to be on the wane. The new generation of independent women is opting for other metals to satisfy their bedecking needs.

This year's gold price hike has dissuaded many buyers from making trips to the famous Zaveri bazaar in the heart of Mumbai. According to Ramesh Zaveri of Zaveri Narandas & Sons, the number of customers this year has decreased by 25 percent.

But for many women the high price is not the only reason that is making them averse to buy gold. Many find gold jewellery too shiny and heavy to wear. 23-year-old Esha Bimur, a correspondent for Bizztech.com, finds gold too gaudy for her taste. "I would rather wear jewellery pieces made of material other than gold which does not make me look too glitzy," she says.

The junky look of silver jewellery wins over the intricate floral motifs on gold which seem to have not evolved according to a new age woman's requirements. It is basic and simple designs that most women now seem to be looking for. Falguni Goghari, who is a 46-year-old architect and product designer in Mumbai prefers silver jewellery as they have simple designs and make an impression without being too flashy. "If the designs on silver jewellery were imitated on gold, I would have definitely bought gold jewellery", Goghari adds.

Colourful artificial jewellery that is plated with gold and encrusted with coloured stones has also caught the fancy of many women. A shop-owner of one such store attributes its popularity to the number of Hindi soap operas on TV. For Hiral Khatri, "This kind of jewellery goes well with the festive season as I can colour coordinate it with my ghagra choli".

It looks like westernised dressing too has taken the glamour out of gold. A girl in a pair of jeans and t-shirt would never want to be caught wearing gold ornaments. The feeling that gold is meant to be paired up with traditional Indian attires is an unwritten but widely accepted concept among the women. 'I like to pair up silver with my daily wear', says 26 year old Sriradha Bhattacharya, an assistant producer for Web18. "Gold somehow does not look good", she says.

Traditionally the emphasis lay on buying 22 karat gold. But now a woman would rather invest on real estate, and mutual funds apart from gold. The intrinsic value of the metal does not seem alluring enough for them to buy gold that will lie in a safe without being used by the owners. Today, women want to use what they own and Preety Aror is no exception. Forty year old Preety, a media person has inherited antique gold jewellery from her grandmother. Yet, she prefers to splurge on silver rather then gold."

Apparently, the World Gold Council seized on these emerging trends and changed the character of its gold promotion in the middle of this year. The new (but really not) way to see gold is as an essential element of Indian culture and way of life. Even if that way of life is more and more limited to the rural one. Last week, sales of small gold coins commenced throughout India's gazillion post offices. That's one way to try to maintain critical gold offtake. Even India has felt the reverberations of the global credit pop. Its central bank cut rates today to keep things going.

Deflationary pressures are keeping liquidation threats alive in the commodities complex for the moment. Once more of the elements of the rescue packages that were deployed worldwide start taking hold, we can hope for more speculative spirit in the markets. The equation remains the same as it has been all month: bargain hunters versus large sellers. We hear there is still an open spot in the Petaluma CA, World Armwrestling Championships.

Happy Hunting.

Jon Nadler is Senior Analyst, Kitco Bullion Dealers Montreal

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