Gold continues to rise despite low demand in India

Gold price increased around $1,230 per troy ounce in today's morning session, as risk aversion among market participants rose. Silver is seen trading above the $15.3 per troy ounce mark. Recently, gold outperformed silver as the gold/silver ratio crossed 80, its highest level last seen in December 2008.

Gold demand in India is low at the moment, while gold ETF inflows continue to remain strong on a global level and demand for gold coins remain boosted in the U.S. As compared to world market prices, gold in India is trading at a discount of as much as $50 per troy ounce, according to industry sources.

Jewellery manufacturers and retail customers are seen reluctant to buy gold after gold prices in India soared to a 2½-year high. Markets will now closely watch the Indian government budget for fiscal 2016/17 which will be presented next Monday in anticipation of reduction in the gold import duties.