Gold rush to remain strong in 2009

January 21, 2009

Commodity Online
NEW DELHI: If you had any doubt about the potential of investors going for gold, just keep those doubts away. Because, analysts have said that people will still buy large volumes of gold this year in order to diversify their investment portfolios.

Experts said that demand for gold will remain strong during 2009 because of a series of economic conditions.

They explained that the US dollar and equity market rates will all have an effect on gold investment levels this year.

However, prices will also be affected by jewellery demand and falling inflation rates. But still experts across the globe predict that investor demand to be strong this year.

An interim update to its annual gold survey by GFMS has stated that the outlook for gold investment is robust this year, in spite of adverse global economic conditions.

According to the report, investing in gold will help to safeguard people from the effects on money markets of fiscal decisions made by politicians.

Analysts are divided on the long term prospects of gold. For example, Salman Partners had revised their gold price estimate from $937 per ounce to $897 per ounce for gold in 2008 while its forecast for gold in 2009 has been downwarded to $950 from $1,025. Although other analysts are quite bullish on gold’s prospects in 2009.

Investors are looking at gold to moderate some of the risks in their portfolio. They are concerned mainly about counterparty risk, market risk and liquidity risk. Although gold does not necessarily remove the counterparty risk but negative real yields—the difference between interest rates and inflation—are also another reason to hold gold.

Gold will be the ultimate winner in 2009, an year, according to pundits that will spell doom for several economies.

Eve as the world is fighting recession, gold industry is witnessing a flurry of activities with several mines resuming held-up projects and seeking to open fresh mines.

A lot of investments have been pumped into gold mining sector in past couple of months, anticipating a major gold rush in the coming days.

So, year 2009 may belong to gold. And, this high expectation is bound to make some impact on the yellow metal’s prices.

According to experts, gold is likely to become ore costlier this year and may touch an all-time high in the first half of 2009 due to expected surge in investments.

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