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.
- 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.
- 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.
- 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.