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Gold Scenario

Gold is the ancient precious metal known to man & for thousands of years it has been valued as a global currency, a commodity & an investment & simply an object of beauty.

Major Characteristics:

  • Gold’s chemical symbol is Au, & it is a monetary asset & partly a commodity.
  • Gold is the world’s oldest International currency.
  • Gold is an important element of global monetary reserve.
  • With regards to investment value, more than 2/3rd of global total accumulated holdings is with central banks reserves, private players, & held in the form of high-karat jewellery.
  • Less than one third of globe’s total accumulated holdings are used as “commodity” for Jewellery in the western markets & industry.

Demand & Supply Scenario:

  • Gold demand in 2010, reached a 10 year high of 3,182.2 tonnes, worth US $180 Billion, as a result of,
  • Strong growth in Jewellery demand,
  • The revival of Indian markets,
  • Strong momentum in Chinese gold demand,
  • China was the world’s largest producer with 340.88 tonnes in 2010, followed by S.A & U.S.A.
  • In 2010, India was the world’s largest consumers with an annual demand of 963 tonnes.
  • The total supply of gold coming onto the market in 2010 reached 4,108 tonnes, a rise of 2% from 2009 levels.

Global Scenario:

  • London is the world’s biggest clearing house.
  • Mumbai is under India’s liberalized gold regime.
  • Newyork is the home of gold futures trading.
  • Dubai, Istanbul, Singapore, & Hong-Kong, are some important consuming countries.

Indian Scenario:

  • India is the largest market for gold jewellery in the world. 2010 was a record year for Indian jewellery demand, at 745.7 tonnes; annual demand was 13% above the previous peak in 1998.
  • A 20% rise in the rupee price of gold combined with a 69% rise in the volume of demand; pushed up the value of gold demand by 101% to Rs. 342 billion. This compares with 2009 demand of Rs 669 billion.
  • The rising price of gold, particularly in the latter half 0f 2010; created a virtuous circle of higher price expectations among India consumers; which fuelled purchases, thereby further driving up local prices.

Factors influencing the market:

  • Above ground supply of gold from central banks sale, reclaimed scrap, & official gold loans.
  • Hedging interest of producer’s /miners.
  • World macro-economic factors such as the US Dollar & Interest Rates & Economic events.
  • Commodity specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring all affect metal prices.