By Vipin Agnihotri
In terms of statistic, gold prices have increased to more than $800 per ounce in the first week of this month since January 1980 on the back of consistent demand. If experts are to be believed, gold has gained around 20 per cent since mid August. This was the time when US subprime crisis sent shivers down the spine of the global financial market.
In my opinion, this trend is likely to continue. As a matter of fact, gold prices are expected to cross $ 1,000 mark in the coming months. Taking all this into account, one can safely say that as an investment option, gold will now compete with real estate and stocks.
There is a strong correlation with global crude prices and gold prices, which are expected to breach the $100 per barrel in coming months. It is worth mentioning in this regard that gold prices move in sync with oil prices as investors hedge against energy-led inflation.
The main reason behind increase in gold prices is the dollars depreciation against the euro and the increase in oil prices. According to sources, over the past six months, investor interest in gold has shot through the roof. On the other hand, demand from jewellery consumers remains unabated. This points to a further hardening of prices.
If the recent report of World Gold Council is anything to go by, lower output of primary gold, strong jewellery demand and increased investor interest are fuelling the rally that shows no signs of running out of steam in the near future.
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