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Roman Baudzus
writes –
The gold
price recovered at Mumbai’s bullion exchange in yesterday’s trading
session, buoyed by demand from India’s jewellery
industry. More and more international investors are also starting to expect
that Portugal will draw upon financial assistance from EU partners, with
further European sovereign debt instability expected.
In India,
standard gold with a gold purity of 99.5% increased by 70 rupees and finished
yesterday’s trading session at 20,695 rupees per 10 grams. Pure gold
with a gold purity of 99.9 jumped by 65 rupees to 20,795 rupees per 10 grams.
The price for silver with a purity of 99.9 climbed by 400 rupees to 56,410
rupees per kilogram compared to the previous day. As traders from
Mumbai’s bullion exchange reported, the silver price was able to gain
due to high investment demand as well as rising demand from industrial end
users. Precious metals were also supported by the violence in Libya, which
has driven many Asian investors to safe havens.
Temporary stabilisation of European bond markets, meanwhile, has
not affected rising buying interest in gold and silver. Many investors are
expecting that Portugal – following the precedent set by Greece and
Ireland – will be the third Eurozone member
to access the EU’s European Financial Stability Facility (EFSF).
Yesterday gold climbed to $1,425 per ounce in Europe until 3 p.m. Silver
reached about $37.50 per ounce at the same time.
However, as
a Reuters survey published on Wednesday shows, 43%
of 28 participating analysts expect the gold price to stagnate in a range
between $1,450 and $1,500 per ounce in the second quarter. Half of the
participants saw the gold price even below or within a range of $1,400 and
$1,450 per ounce until the end of June. Some analysts predict that the dollar
will soon bottom, which could negatively affect the gold price development in
the second quarter. Nevertheless, this situation would not disturb the yellow
metal´s long-term bull market, though China’s central bank voices
a more cautious note.
As a study
by the People´s Bank of China (PBC) published last Friday stated,
"we need to note that gold prices have reached historical highs, and its
downward risks should not be overlooked". However, this caution this is
hard to reconcile with the PBC also warning of a
deterioration in Europe’s sovereign debt crisis, further
declines in the US dollar over the rest of the year, further gains in
commodity prices and continuing lax monetary policy from central banks.
China’s
state-owned broadcaster CNTV reported this week that gold purchases by domestic
investors are skyrocketing. As the head of a large Chinese gold trading
company said in an interview with the broadcaster, his business had grown by
20% every month in the last two years. More and more local traders are being
told that their gold deliveries are being rationed due to the intense demand.
More delivery bottlenecks will add to price pressure. The demand from
China’s middle class is one of the main drivers of the gold price.
Market observers said that this situation would likely not change in the
foreseeable future.
Goldmoney.com
All
data and quotes sourced from Reuters.Published by GoldMoney
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