Gold Price may touch $700 per ounce by the end of 2007
GFMS CEO Paul Walker has predicted Gold price to touch $700 per ounce by the end of year. The reason behind this is weak outlook for the US dollar and sub-prime worries in United States. Mr. Walker further stated “The sub-prime issue is just the tip of the iceberg. It is symptomatic of a larger malaise in the system.” He was in Mumbai for fourth India International Gold Convention.
“Outlook for the US dollar remains poor and the US economy is highly leveraged on an increasingly problematic housing market. Also, interest rate spread between the dollar and euro has fallen over the last few months,” he said.
Investment in Gold is considered safer compared to other investment options. Due to safety concerns due to economic and political slowdown, there may be more investment in Gold in coming months and this may result in rise in gold prices.
Mr. Walker also said that total jewellery fabrication is expected to grow by a nearly 18% at 875 tonne in second quarter of 2007. There has been an increase in demand of Gold in India, China and the Middle East. Physical demand for bars can increase to 85 tonne in second quarter compared to 68 tonne in first.
Gold imports to India in the second half of 2007 may go up to 300 tonnes. However, there may be negative impact on Gold demand from India, in case the price of Gold rises to $700. Indian customers are comfortable to buy Gold in $635 - $670 per ounce range. India has maintained its position at number one in world gold market. The country set an all-time record in both jewellery and retail investment. The Gold demand in Indian market grows during wedding and festive season as well.
Mr. Rajan Venkatesh, Director of Scotia Mocatta, announced that Bullion Banks Association will seek permission from Reserve Bank of India (RBI) to allow interbank trade in bullion.