permanent: India is the world´s largest market for gold
03.04.06 10:01
 Gold prices: More volatility lies ahead - Oman |  | |
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MUSCAT — Gold prices are expected to witness high volatility in the days to come as sharp upsurge in international demand for gold, especially from Chinese, Indian and American investors continues to trigger prices.
As the World Gold Council underlines, "gold is completely free of credit risk, although it bears a market risk. Gold has always been a secure refuge in unsettled times."
Gold has proved itself to be an effective way to manage wealth. For at least 200 years the price of gold has kept pace with inflation. In 1999, Alan Greenspan, then chairman of the Federal Reserve of the US, said: "Gold still represents the ultimate form of payment in the world."
Gold prices climbed by 36 per cent since April 2, 2005. In Muscat, a ten-tola piece (116.64 grams) of gold biscuit was worth RO849 yesterday. The price per gram for 24-crt gold is quoted at RO7.278, and 22-crt is quoted at RO6.674.
The undertone indicates that prices may cross $600, and some investors are even eyeing a price of $800 a troy ounce. Gold prices have also been bolstered by the entry of new institutional investors.
"International markets witness an aggressive buying from stockists and institutional investors such as central banks and other financial institutions across developing and developed markets. On March 31, 2006, the price stood at over $581 a troy ounce (one troy ounce is 31.1034768 grams) in the international market. One gram of gold is now worth more than $18.92 (RO7.278)," Riyas, senior manager, operations, Sea Pearls Oman told Times Business. On March 30, 2006, on the New York Mercantile Exchange, gold prices climbed to a 25-year high of $588.10 an ounce on high speculation that prices might touch new highs.
Riyas said nobody would be surprised if prices crossed $600 before the end of this year. But he strongly cautioned people that high prices also mean high risks.
Traders from Mumbai said that demand for gold in small markets had tumbled over the past two months or so, as prices continue to test new historic levels.
Oman, the neighbouring markets and India, according to gold market analysts, now witness a fall in demand for jewellery.
"Over the long-term, gold has a history of maintaining its purchasing power in real terms. Though studies had shown that over the last decade gold has been a depreciating asset, taking a 30-year perspective, it has been an extremely good investment, and over fifty years, it has more than held its own against inflation. This is another sound economic reason for holding gold, as it remains its store of value," analysts from Dubai said.
India is the world's largest market for gold. Gold consumption in India now stands at more than 850 tonnes, and is growing by nearly 25 per cent a year. It was estimated in 2004 that Indians hold more than 13,000 tonnes of gold in various forms, more than seven per cent of the total global gold stock. |
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