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BW Businessworld

Yellow Gets Brighter

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Nothing, it seems, is as good as gold. For weeks (even months) now, the price of the yellow metal has been going up steadily.

In the first three weeks of August 2012, prices of gold in India went up around 7 per cent. Analysts all over the globe believe that gold prices will only go higher from here. Tim Fitzpatrick, a forex analyst with Citi in New York, predicts the precious metal will hit $2,500 a troy ounce in the first quarter of 2013.

Compare that to what the World Gold Council reported in its quarterly report on gold demand trends published in mid-August: that gold demand (mainly in China and India) declined nearly 26 per cent in the second quarter of 2012.

But if people did not buy, central banks did: about 158 tonnes of it, more than double what they bought in the second quarter of 2011, and 62 per cent more than their purchases in the first quarter this year.

And governments tell you it’s an unproductive asset.

(This story was published in Businessworld Issue Dated 17-09-2012)