Questions around falling gold prices

Gold prices make news when they rise or even when they fall. And last weeks crashing gold prices didnt just sent consumers on a buying spree but also a topic of hot conversations on both sides of the counter.

A few topics of conversations around this phenomenon which I was a part of or over heard my colleagues take it in the store.

Consumer: Is this a good time to buy gold or should I wait a little more?
Aditya: Remember what happened in stocks. People thought sensex will touch 25,000 and refrained from profiting when they could. It tanked and touched 14,000 instead. Similarly when gold was on an upswing there were rumours it would touch 15,000 per 10 gms. It tanked to 11,000 and now people think it will touch 8,500. I would beg to differ. Any kind of investments should be done in phases and thus making a median gain than trying to hit the bottom.
Consumer: Kyun Bhaisahab! Fall in gold prices must be hurting jewellers?
Aditya: No. Not Really, In fact quite the opposite.
Consumer: With eyeballs popping out. hows that?
Aditya: When the gold prices were sizzling hot at Rs. 13, 600 or so, the flow of customers had slowed to a trickle. People weren't sure if this is the benchmark price they should get used to. For a lot of people it made their budget go haywire. Now when the prices have fallen people are queuing back to jewellery stores.
Consumer: What about the jewellery/gold bought at higher prices. Aren't they of lower value?
Aditya: Sure it is, but every time a piece of jewellery is sold, the equivalent of gold is brought the same day at the same prices. I have a post on this. So a jeweller's margin(that of making charges) is intact.
Consumer: But why this sudden fall in gold prices?
Aditya: One aspect is sure that US dollar has become stronger vis-a-vis Indian rupees. And as a thumb rule they move opposite each other. Both gold and US dollar vie for the Big hedge funds, Financial institutions' money. And as dollar shows promising signs of beating the inflation, a lot of money is taken out of gold and put into them. The opposite happened when dollar was tanking. Gold rose. How its related to crude is not clear. Visitors to this blog are welcome to comment.