Slower demand with Gold above $900

The price of gold has been following the high price of oil as a way for investors to hedge against inflation. With oil continuing its climb, the attraction of gold increases. Even though Saudi Arabia has claims to be increasing production, the market seems skeptical about their intentions or even ability to do so.

Gold being the favorite of investors when it comes to hedging the depression, its popularity has only increased among investment funds. But when it comes to other traditional buyers of the metal, the demand has gone down according to the World Gold Council. With global use down 16% from same time last year, the demand has reached the 2003 level. China, Russia, Vietnam and Egypt having supported the demand while in India, a traditionally high user of gold, the demand has dropped around 50%.

With high prices, global consumer buying of jewelery has slowed considerable, down about 21% reaching demand levels last seen in the 1990's. With continued high prices, it's questionable when the consumer confidence will increase towards buying of gold accessories.

With high prices and falling consumer demand, the possibility of profit taking is ever more evident. The only thing keeping the price of gold up for the moment is the high price of oil. If oil prices start to pull back on possible profit taking, gold is bound to follow suit.