The current dip in gold prices is temporary and demand for the precious metal is
likely to rise in the medium term, Ronald-Peter Stoferle, international equities
analyst at Erste Bank, wrote in a market note Wednesday.
"We would seize the current opportunity of general profit taking to buy as
soon as the short-term downward trend is over," Stoferle wrote. "We regard the
current consolidation as a good buying opportunity and envisage higher gold
prices in the medium to long term."
Demand for gold, seen as the ultimate safe haven against inflation and a good
instrument for diversification, is likely to continue rising, he said.
Total demand for gold is around 3,600 metric tons but global miners produce
only around 2,450 metric tons annually, with the deficit compensated by central
bank sales and recycling, said Stoferle, adding that the gap between demand and
supply widened last year and was likely to continue to do so.
Robust jewelry demand as well as industrial demand might come down slightly in
2008, but the central banks in Russia, China and the Arabic region will want to
decrease their dependence on dollars, he said.
"Even if only a small percentage of the (petro) dollars gets funneled into
gold investments, this will trigger another price leap," Stoferle said.
Gold, which currently trades at around $889 an ounce, reached an all-time high
of $1,034 in mid-March.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations &
outlook are included to enable a better comprehension of the Company prospects.
Actual results may, however, differ materially from those stated on account of
factors such as changes in government regulations, tax regimes, economic
developments within India and the countries within which the Company conducts
its business, exchange rate and interest rate movements, impact of competing
products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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