Gold prices firm up, Is it speculation or US financial markets?

This just in. Its almost 10:30 pm on Wednesday night. And it pulled me out of my bed. Gold prices have shot up to cross Rs.12,500 at MCX(the commodity trading exchange). What looks like the first thing that comes close to explaining this is the melting US financial markets. The LEHMAN brothers and Merrill lynch being the leaders of the pack. On closer look one sees this as a belated effect. Isnt the Lehman story 24 hrs old? So why did this knee jerk reaction take so long? Could it be finally that the speculators have grouped together and taken the gold markets on a ride.

This is a slow period for the commercial markets especially in India with sales picking up during the festive season beginning with the navratras. Navratras start from Oct 1. So a lot of jewellers were planning to ramp up stock for the festive season now. And looks like the speculators have had eyed this opportunity. This can make the festive/marriage season bitter not just for shoppers but jewellers too.

Gold prices have been firming up over the last week( you can look at the last weeks prices in the right column under the heading Today's Gold prices), which confirmed a see-saw pattern in gold prices. But this is a roller coaster, what can I say, Buckle Up!

Funny thing life is: I cannot help but contrast my mood between the last post and this one. Read it for yourself and compare.