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GFMS sees gold breaking through $1600 mark

Jewellery demand in China and India will help boost the price of gold to $1600 US per ounce this year, says metals consultancy, GFMS.
The price of gold is expected to hit $1600 US per ounce before the end of the year, says GFMS.

In its Gold Survey 2011, the metals consultancy reports the price increase will be driven by greater demand in the investment and jewellery sectors.

“Last year, we saw signs of the gold market having adjusted to higher prices,” said GFMS chair Philip Klapwijk. “While jewellery demand partially recovered following 2009’s steep losses, scrap supply was little changed even though gold prices posted a series of record highs in 2010.”

According to the consultancy, the majority of the gain in jewellery demand occurred in China and India. The United States, European Union, and Middle East all experienced an increase in scrap supply last year, rather than jewellery consumption.

Overall, concerns about inflation and a reluctance on the part of governments in general to tighten monetary policy are setting the stage for further price increases for the yellow metal.

“And with the spotlight also shining on the state of government finances, there is every reason to believe that investors will remain focused on the gold market,” Klapwijk said. “Furthermore, growing price acceptance by consumers will help lift jewellery demand, while generating only a muted response from scrap. Together, these will help raise the support level in the gold market and provide a firm platform for investors to take gold higher.”

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