Gold may touch $1,000

Gold prices have shot to over $800 (RS 32,000) per ounce (31.103 gm) in the first week of November for the first time since January 1980 on the back of consistent demand.

The yellow metal has, in fact, gained over 20 per cent since mid-August, when the US subprime crisis sent shivers down the spine of the global financial market. This trend is likely to continue. Says Umesh Ganjam, Joint MD of the Bangalore-based Ganjam Nagappa & Sons, a leading luxury jewellery brand: “Gold prices are expected to cross $1,000 (Rs 40,000) in the short term.”

 Some analysts have even predicted prices levels of $1,200-1,500 (Rs 48,000-60,000) per ounce. “As an investment option, gold will now compete with stocks and real estate,” he says.

Ganjam points to the strong corelation gold prices have with global crude prices, which are expected to breach the $100 (Rs 4,000) per barrel any time now. Gold prices move in sync with oil prices as investors hedge against energy-led inflation.

According to C. Ganesh Narayan, Executive Director of leading retailer C. Krishniah Chetty & Sons, the dollar’s depreciation against the euro and the increase in oil prices will take the gold prices to an all-time high. “Over the past six months, investor interest in gold has shot through the roof; and demand from jewellery consumers remains unabated. This points to a further hardening of prices,” he says.

According to a World Gold Council report, lower output of primary gold, strong jewellery demand and increased investor interest are fuelling the rally that shows no signs of running out of steam anytime soon.