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Posted On: 28 August 2011 01:58 pm
Updated On: 12 November 2020 02:11 pm

Investors turn to gold as stocks lose value

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THE outlook on gold continues to be bullish despite the fall in prices by $200 per ounce last week. The price of gold had dipped around 11 percent globally, which encouraged bargain hunters to take advantage and purchase the yellow metal. Talking to Qatar Tribune, Vinoy Davis, senior official at Joy Allukas Jewellery Store, said: “Despite, spiralling price in recent weeks, people are buying gold. Among all the precious metals, gold is the most popular as an investment. With returns on stock markets and property investments looking increasingly uncertain, more people are buying gold as a hedge against inflation. We have exhausted all gold bars from 2.5 grams to 100 grams and have placed orders for more from Dubai. Our customers are mainly Indians who are buying more bullions compared to jewellery.” “On Friday, gold rate was QR213per gram for 24 carats and QR201per gram for 22 carats. By Saturday, it has again gone up to QR221 for 24 carat and QR207 for 22 carat. Yet people are buying new and exchanging old gold ornaments. By the end of the year, gold prices could top $2,000 an ounce as the buying momentum continues to be strong, mainly in gold coins and gold bars,” he added. He said that many investors have turned to gold as a secured means to save and make their money grow. “Nowadays, investors generally buy gold as a hedge against economic, political or social crisis, which include i n v e s t m e n t m a r k e t declines, burgeoning US national debt, currency failure, inflation, war and social unrest. Historically speaking, gold prices have more than quadrupled since the turn of the century and the appeal of commodities as a safe haven is undiminished. Not only have the gold investments yielded higher returns compared to other asset classes, but it is relatively easy to buy and sell,” Davis said. “The most traditional way of investing in gold is by buying gold bars. The price of bullion is expected to fare well by the end of the year. Though it could be a sustained rally, I think by year-end there could be a correction and we may see heavy profit-taking. Certain consumer segments are affected by the rising prices of gold but not others. So there is not too much of an impact on sales in value terms,” he concluded. According to the World Gold Council (WGC) recent report, Asian buying and global economic concerns are expected to drive gold consumption for the rest of the year. The council’s second-quarter 2011 estimates revealed that gold consumption, in value, went up almost five per cent year-onyear to $44.5 billion, the second- highest amount ever. The report also states that gold posted 15 per cent gains this month but the demand of gold declined by 17 percent in the second quarter of 2011 compared to same period last year. According to industry experts, gold can be used as a hedge against inflation, deflation or currency devaluation. The currencies of all the major countries are under severe pressure because of massive government deficits. The more money that is pumped into these economies – the printing of money– then the less valuable the currencies become. Buying gold on price dips may still be a good investment opportunity for Qatari residents, especially for those who missed out on the last rally. Jewellery consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27 per cent of demand in 2010, followed by China and the USA. Industrial, dentistry and medical uses account for around 12 per cent of gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonisation. Gold hit a record $1,900 (QR6,977) an ounce on last Monday as European stock markets fell, hit by concerns over Eurozone debt levels and fears of a double dip recession. With the ongoing uncertainty over the future of European economies, prices are likely to remain high, and may continue to rise.