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Benedicte Gravrand, Opalesque Geneva: Third quarter gold demand rose by 8% year-on-year, reaching a two-year high of 1,120.9 tonnes, according to the World Gold Council. ETF outflows contributed to a price dip in July, which boosted consumer demand around the world. Subsequently, a positive shift in institutional investor attitudes led to modest ETF inflows in August and September, which pushed prices back up.
But gold prices did not wholly go up in response to higher demand (losing more than 8% in the last six months), and this rising demand is taking place just as the US dollar is gaining strength and the yuan is weakening, make gold more expensive for Chinese buyers. The latter are buying gold, some say, as an investment against their own currency’s depreciation.
Experts say the futures market that determines the price is locked in a bear market cycle, which is being driven in this latest phase by the interest rates debate, reports The Week. Gold also remains at a high relative value compared to other commodities, which have fallen further, suggesting a harder correction is due. If gold hits bottom, this could lead to stronger demand and a subsequent rally.
As for hedge funds, there have been ...................... To view our full article Click here
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