Yellow metal unlikely to see a loss in its gloss

The expected Central Banks Gold Agreement (CBGA) meeting will not have an impact on gold prices and the yellow metal will continue to respond to market sentiments emanating from rising demand, a fluctuating dollar and a need to hedge against inflation, said analysts. The CBGA meet is scheduled for September this year to decide on the sale of gold in reserve. European Central Banks is expected to renew an agreement it had earlier made to maintain a controlled sale of gold. "We do not expect the CBGA meet to have any impact on prices. Market sentiment will hold sway. Demand is picking up in India, which is a major consumer of gold," Jeffrey Rhodes, CEO, Intl Commodities, told Emirates Business. Rhodes said the bullion's price will oscillate in the range of $920 and $960, with a risk of it surging by $50 or falling by an equal amount if it touches either of the limits. Gold was priced at $933 an ounce in Dubai on Tuesday. Sajith Kumar PK, CEO, JRG Metals and Commodities, a DGCX registered broker, said that although gold has always responded to downward pressures that arise in December it is not expected to do so this year. "It used to be an annual phenomenon that prices would drop just on expectations from the CBGA meeting. That will not happen this year and we do not expect the central banks to dispose off much gold in September," said Sajith. MF Global, a Chicago-based market analysis firm, said in its latest report that gold prices may shoot to a high of $1,033 an ounce but took a safe long position of the bullion averaging at $950 an ounce this year. It also warned that the bullion prices may find support at $930 an ounce. Dan Denning, a commodities analyst who writes for Commodities Online, wrote recently that the main driver for gold prices this year will be the fluctuating dollar. He said central banks will prefer to hold on to their gold reserves this year. Gold held in central bank reserves worldwide shrank by more than one-sixth over 20 years from 1989 to 2009. The central bank gold sales reached such a feverish pitch in 1999 that a treaty was signed by the big European banks, capping the level of bank gold sales at 400 tonnes per year for fear of causing a collapse in prices. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .