There are reasons for cautious optimism for gold prices for the remainder of the year, according to the World Gold Council.
From the perspective of consumers in price-sensitive markets, falls in the gold price can be a strong buy signal, it said in a report on Thursday.
“Lower prices in markets across Asia and the Middle East often trigger purchases and interest has already been reported across a number of these.”
There are tentative signs that the summer drop in gold prices has lifted appetite for gold in both China and India, with interest having picked up a little following the price fall, it said.
The onset of the festival and wedding season in India in the fourth quarter suggests healthy prospects for jewellery demand for the remainder of the year, although this assumes normal monsoon rainfall.
As well, according to the WGC, China’s central bank announcement that it had increased its gold reserves is supportive for the gold market as it reinforces it’s position as a key reserve asset in helping central banks to diversify away from the dollar.
The bank confirmed that they purchase gold through a variety of channels, and reiterated its positions that China ‘holds gold through its people’ – tacit encouragement for Chinese consumers to build their ownership, it said.
In July, China’s central bank announced that it had increased its gold reserves by 604 tonnes since 2009.
This week saw the gold price rebounding to three-week highs after China devalued its currency over three successive days.
The spot gold price was last at $1,116.9/1,117.1, down $7.30 on the previous close.
(Editing by Martin Hayes)
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