With gold prices hitting their historical high two months ago due to market anxiety over the global economy perspective the yellow metal remains the most attractive investment hedge, the World Gold Council (WGC) says in its quarterly review.
Heteropolar world economic news, fears of a deepening global economic downturn and weaker world currencies have allowed the yellow metal to keep its shine of an investment tool during the second quarter of the current year, the WGC experts remark.
On their part, investors shunning other investment assets on the backdrop of instability prefer just gold which has a more reliable and liquid alternative value as a “safe haven” for capital investments proved by its mass buying.
In the second quarter of the current year prices for gold shot up to their historical high. On June 28, gold reached $1261 per ounce at the London bullion market. In the end of June its price was $1244, up 11% vs the previous quarter, while in euro terms the metal cost rose more than 23%.
If we compare the evolution of prices for gold with other investment assets from the point of view of historical standards, then the price for gold does not appear overestimated, Juan Carlos Artigas responsible for the WGC review says.
Gold, a hedge without default risk
In the beginning of July WGC urged central banks of the world community nations to increase their gold reserves, having emphasized the fact that unlike sovereign debts and national currencies gold is not threatened by default being an investment asset used by almost all central banks.
As in the first months of the year, gold consumption in the emerging markets also spurred its global demand and a consequent rise in prices, according to the WGC review.
As a result, the jewelry sector accounting for 60% of the global demand has considerably improved India’s business indicators compared with the last year and in June started to recover in China, according to experts who predict this trend will be even stronger by the end of this summer.
In spite of the fact that according to many indicators jewelry consumption in India and in the Middle East is not immune to rapidly growing prices for gold, this metal demonstrates an obvious progression against the lows of 2009, the review says.
Besides high rates of economic growth in China, in the long-term local gold buyers are stimulated by yuan exchange rates made higher by the Chinese authorities which could transform it into a more flexible currency, experts say.
Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels
