Investors relies on spot gold as safe haven

January 12, 2009

Commodity Online
MUMBAI: Confused investors at last returning to their early destination in spot gold where they could rely amid the economic turmoil. According to forecasters, an immediate surge in demand for physical gold could be seen in near term as worried investors turning towards gold as safe haven.

However the demand for the futures gold is waning due to the weak economic prospects hit by global economic recession. Besides the increasing number of jobless data also a nightmare for the yellow metal futures.

Demand has now reached such unprecedented levels that the Perth Mint, Australia's biggest wholesaler of gold coins and bars, has been forced to ration its sales.

Perth Mint's bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.

The mint has suspended sales of all gold bars and all bullion coins - except its 1oz Kangaroo gold bullion coin.

On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.

Meanwhile, gold futures in the international market continued to trade down owing to emergence of US dollar with new gains and the dismal non farm payrolls report that released on last Friday.

The Euro was last seen quoting at 1.3379 against the greenback - its one month low and COMEX Gold was hovering at $847.60, down $7.40 an ounce for the benchmark February delivery.

MCX Gold futures for February are also down Rs 106 or 0.80% at Rs 13222, having come off a low of Rs 13201 per 10 grams. The counter has dropped 0.63% in the open interest.

The Dollar still continued to ride high and with the technical momentum in its side, the greenback is expected to hold on this week ahead of the ECB interest rate decision.

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