Bullion Desk

Gold to maintain upward momentum on combination of bullish factors - WGC

September 8th, 2009

By Clara Denina

A combination of weak dollar, improved investor interest and higher inflation worries are seen as a positive factor for gold prices, the World Gold Council (WGC) said.

"Reaching the $1,000 mark once again shows that this price level is no longer the watershed for gold that it once was," WGC CEO Aram Shishmanian said in a statement on Tuesday. "Investors are turning to gold as they seek assets which preserve their wealth, whatever the financial weather."

Gold climbed to $1,007.90 per ounce on Tuesday, surpassing a previous high for the year at $1,006.30 hit in February and returning to levels not seen since the metal reached a record of $1,032.60 on March 17, 2008.

The yellow metal seemed caught in rangebound trade in the $930-$970 area as investors turned towards riskier assets such as equities after a wave of positive economic data from leading world’s economies.

But concerns about whether the recent rise in equity markets is sustainable in the short term has encouraged investors to look to gold’s unique wealth preservation qualities to underpin their portfolio strategies again, the council said.

Retail and institutional investors are increasingly turning to gold as an independent asset class to ensure their portfolios are properly diversified and mitigated against risk, while rising inflation triggered by governmental measures to stimulate recession-hit economies could also support prices.

Gold is usually seen as an hedge against inflation and dollar fluctuations. The US currency is currently trading at its lowest against the euro in more than a month.

"The stability in the gold price over the long term is testament to the diversity of gold’s demand base, which insulates the price from movements in any single category or country," Shishmanian said. "This is a luxury many other assets, more closely linked to industrial output or consumer spending, do not enjoy."

Gold to maintain upward momentum on combination of bullish factors - WGC

September 8th, 2009

By Clara Denina

A combination of weak dollar, improved investor interest and higher inflation worries are seen as a positive factor for gold prices, the World Gold Council (WGC) said.

"Reaching the $1,000 mark once again shows that this price level is no longer the watershed for gold that it once was," WGC CEO Aram Shishmanian said in a statement on Tuesday. "Investors are turning to gold as they seek assets which preserve their wealth, whatever the financial weather."

Gold climbed to $1,007.90 per ounce on Tuesday, surpassing a previous high for the year at $1,006.30 hit in February and returning to levels not seen since the metal reached a record of $1,032.60 on March 17, 2008.

The yellow metal seemed caught in rangebound trade in the $930-$970 area as investors turned towards riskier assets such as equities after a wave of positive economic data from leading world’s economies.

But concerns about whether the recent rise in equity markets is sustainable in the short term has encouraged investors to look to gold’s unique wealth preservation qualities to underpin their portfolio strategies again, the council said.

Retail and institutional investors are increasingly turning to gold as an independent asset class to ensure their portfolios are properly diversified and mitigated against risk, while rising inflation triggered by governmental measures to stimulate recession-hit economies could also support prices.

Gold is usually seen as an hedge against inflation and dollar fluctuations. The US currency is currently trading at its lowest against the euro in more than a month.

"The stability in the gold price over the long term is testament to the diversity of gold’s demand base, which insulates the price from movements in any single category or country," Shishmanian said. "This is a luxury many other assets, more closely linked to industrial output or consumer spending, do not enjoy."

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