Strong demand in Gulf, India to push gold prices
Demand for gold will remain robust during 2010 on account of increasing demand from the Middle East, India and China, the World Gold Council (WGC) said.
The rising global investment demand driven by continuing uncertainty over public debt and economic recovery is expected to push prices.
“We witnessed an increase in demand in the UAE around Akshaya Tritiya, the Indian festival,” said Ajay Mitra, Managing Director, India, Middle East and Turkey at the WGC.
Investment demand is expected to keep pace with increasing prices.
Gold rose for a second day on Wednesday to an eight-week high above $1,240 an ounce as the dollar fell against the euro and concern over economic growth hit equities, fuelling interest in the metal as a safe haven.
In the local markets, gold rose to Dh147 per gram.
The yellow metal is benefiting from renewed demand for a haven from volatility in assets seen as higher risk, like equities, after a recovery in risk appetite in July and early August led prices to retreat from June's record highs.
The WGC said in its trends report that India and China were likely to provide the main thrust to demand growth this year and predicted investment demand would stay strong.
“While demand in the Middle East was mixed for the second quarter, we have witnessed growth in gold jewellery demand in Saudi Arabia, where the local population appears to be buying in anticipation of further price increases,” the WGC official said.
During the second quarter of 2010, the average gold price moved into higher trading ranges in most currencies. Gold surged to a new high of $1,261 per ounce on June 28, 2010, above May’s record of $1,237.50.
Demand in Egypt was 15 per cent down on year-earlier levels as the higher gold price took its toll. However, on a half-year basis, demand for the first half of 2010 was 2 per cent above the 2009 first half, as tourist numbers recovered during the first six months of the year.
India and China will continue to provide the main thrust of overall growth in demand, particularly for gold jewellery, for the remainder of 2010.