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| Gold rises on demand for jewellery |
| Bloomberg / Apr 22, 2009, 00:23 IST |
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 Gold rose for a second day in London on demand for an alternative to stocks and on higher imports into India, the world’s largest consumer of the precious metal. Platinum, silver and palladium also gained.
The MSCI World Index of shares fell as much as 0.6 per cent, taking this year’s drop to 8.2 per cent. Gold is up 1.3 per cent in 2009. Paul Tustain, founder of gold storage and trading company BullionVault, said yesterday gold may double to a record in five years as investors seek an alternative to cash.
“There seems to be a temporary inverse relationship with equities and gold,” said Emanuel Georgouras, a precious metals trader at Marex Financial Ltd. in London. “India has found some jewellery demand recently.”
Gold for immediate delivery rose $5.15, or 0.6 per cent, to $889.65 an ounce. Prices rose 1.8 per cent yesterday, halting a four-week slide. June gold futures gained 0.3 per cent to $890.40 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
The Standard & Poor’s 500 Index has dropped 7.9 per cent this year. Gold advanced 5.8 per cent last year when the S&P declined 38 per cent and the euro declined 4.2 per cent against the dollar.
“I regard gold as a good way of storing value when currencies can’t be trusted” in times of deflation or inflation, Tustain said in an interview yesterday, forecasting a gold price of $2,000 an ounce in five years. Gold rose to a record $1,032.70 an ounce in March 2008.
“The expected return on cash is negative and will be for the foreseeable future,” Tustain said. “That creates a very good market for owners of gold.”
The RBI reduced interest rates for the sixth consecutive month to 3.25 per cent, a record low. Sweden’s central bank, the world’s oldest, cut its main rate to 0.5 per cent.
Gold imports by India may more than double this month from a year ago as the recent price decline revives demand ahead of the nation’s Akshaya Tritiya festival next week.
Purchases may reach 50 tonnes from about 25 tonnes last year, said Harmesh Arora, vice president of the Bombay Bullion Association Ltd.
About 10 tonnes has been imported since April 1, he said in Mumbai.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, were unchanged yesterday at 35.56 million ounces.
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