India, China demand may boost gold prices in 2008

India, China demand may boost gold prices in 2008
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First Published: Tue, May 22 2007. 12 03 AM IST
Updated: Tue, May 22 2007. 12 03 AM IST
Gold prices may peak in the first half next year driven by rising demand for luxury goods in India and China, according to Westpac Banking Corp.
Gold for immediate delivery may trade above $700 (Rs28,700) an ounce at the end of this year, Huw McKay, senior international economist at Sydney-based Westpac, said in an interview. Gold has averaged $659.34, so far this year after reaching a 26-year high of $730.40 last May.
Demand in India, the world’s largest buyer of the metal, rose by half in the first quarter from a year earlier, while demand in China gained 31%, the London-based World Gold Council said last week.
“China is a major emerging market, there is tremendous wealth building up among the middle class there, as it is in India,” said Gavin Wendt, senior resources analyst at Fat Prophets. Gold for immediate delivery has risen 4.1% so far this year and traded at an 11-month high of $694.25 on 23 April.
Westpac’s McKay will be speaking at a two-day gold conference being held on Monday and Tuesday in Perth by publisher Paydirt Media Pty. The conference is being attended by the world’s four largest gold producers, Barrick Gold Corp., Newmont Mining Corp., AngloGold Ashanti Ltd and Gold Fields Ltd.
The purchases, accounting for about 75% of gold demand, jumped 17% to 573 tonnes as consumers grew more comfortable with gold above $650 an ounce, the London-based Gold Council said. Demand from India rose to 211 tonnes and Chinese demand rose to 90 tonnes.
India’s middle class has tripled in the past 20 years to 300 million, equal to the population of the US, as the government opened its economy to foreign investors. The affluent class is growing, helped by the fastest salary raises in Asia and the world’s second-fastest economic growth. Indian demand typically rises in the wedding season, which runs from late September to December. Jewellers also buy the metal during Diwali.
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First Published: Tue, May 22 2007. 12 03 AM IST
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