Friday 23 September 2011

Gold


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

Major Characteristics:
  • Gold is the world's oldest international currency.
  • Gold is an important element of global monetary reserves.
  • With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of high-karat jewellery.
  • Less than one-third of gold's total accumulated holdings are used as “commodity” for jewellery in the western markets and industry.
Demand and Supply Scenario:
  • China was the world's largest gold producer with 340.88 tonnes in 2010, followed by the United States and South Africa.
  • Gold demand in 2010 reached a 10-year high of 3,812.2 tonnes
  • In 2010, India was the world's largest gold consumer 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 liberalised gold regime
  • New York is the home of gold futures trading
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. In local currency terms, Indian jewellery demand more than doubled in 2010.
  • The rising price of gold, particularly in the latter half of 2010, created a 'virtuous circle' of higher price expectations among Indian consumers, which fuelled purchases, thereby further driving up local price.
Factors Influencing the Market:
  • Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
  • Hedging interest of producers/miners.
  • World macroeconomic factors such as the US Dollar and interest rate, and 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

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