Thursday, January 27, 2011

Gold price rises by 29 per cent

The gold price rose by 29 per cent in 2010, according to the World Gold Council (WGC).
The gold price rose for the tenth consecutive year driven by recovery in key sectors of demand and continued global economic uncertainty. Not only was gold’s performance strong, but its volatility remained low, providing a foundation for a well diversified portfolio.
By comparison the S&P Goldman Sachs Commodities Index (S&P GSCI) rose by 20 per cent, the S&P 500 rose by 13 per centm, the MSCI World ex-US Index increased by six per cent in US dollar terms, and the Barclays US Treasuries Aggregate Index rose only by six per cent over the year, the digest said.
Gold price witnessed 16 per cent volatility on an annualised basis in 2010 and remained consistent with its long-term trend. By comparison, volatility on the S&P Goldman Sachs Commodity Index was 21 per cent during the year, based on daily returns.
The precious yellow metal benefited from the continued contagion from European sovereign debt problems as investors’ hedge their currency risk, it said, adding that it was evidenced by strong gold buying in ETFs, bars, coins and other investment vehicles in Europe and other parts of the world.
The investors bought 361 tonnes of gold in the ETFs, the WGC monitors in 2010, bringing total holdings to a new high of 2,167 tonnes, worth $98 billion. "It represents the second largest yearly inflow on record, after the 617 tonnes of net inflows experienced in 2009," according to the digest.
During the first nine months of 2010, global jewellery demand totalled 1,468 tonnes, increasing by 18 per cent from the same period during 2009. Gold demand for technological and industrial applications continued to recover during the first nine months of 2010, registering a 19 per cent increase over the same period in 2009, said the report.
Central banks became slight net buyers of gold for the full-year, after two decades as a steady source of supply to the market. The IMF successfully completed its gold sales programme of 403.3 tonnes without disruption to the market. The IMF sold 200 tonnes to the Reserve Bank of India, 10 tonnes to Sri Lanka, 10 tonnes to Bangladesh and 2 tonnes to Mauritius, all in off-market transactions executed at market prices. The remaining sales were conducted through on-market sales within the ceiling set by the third Central Bank Gold Agreement (CBGA3).

Domestic market
KATHMANDU: Due to surge in the international price, the domestic market has also witnessed a record high gold price in 2010. On December 7, the
precious yellow metal crossed Rs 40,000 and was traded for Rs 40,398 per tola (11.66 gram) but the price has cooled down a little and has been trading between Rs 39,000 to Rs 40,000 per tola lately.

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