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Industry experts expect that the rising gold prices will continue to globally. Three factors are attributable for this rising trend. The first being the fall in metal prices which has acted as a dampener on jewelry demand. Secondly, the global mining output too is falling and lastly rising interest rates are expected to stabilize. Another reason could be the further devaluation of the dollar. Devaluation of the dollar and further fiscal imbalance in the U.S would further necessitate the use of a hedge in the form of gold. As on December 1, 2006 gold gained by Rs 110 and reached the Rs 9460 per 10 grams mark. Silver on the other hand remained stable and recorded a rise of Rs 700 at Rs 23,600 for buying 100 pieces. The ECB completed sale of 23 tons gold as per a prior agreement made with other central banks two years ago. Traders expect a hike in prices as a result of this ongoing sale.
A Comparative Table of Gold and Bullion Market in India and the Global Market (approximate figures)
| Annual gold Items |
India (In Tons) |
World (In Tons) |
%age Share |
| Total Stocks | 13000 | 145000 | 9 |
| Central bank Holding | 400 | 28000 | 1.4 |
| Annual Production | 2 | 2600 | 0.08 |
| Annual Recycling | 100- 300 | 1100 - 1200 | 13 |
| Annual Demand | 800 | 3700 | 22 |
| Annual Imports | 600 | | |
| Annual Exports | 60 | | |
Global Gold Prices
Currently global gold prices at $645 an ounce is expected to hit 4700 within the next six months. The current price is $75 short of its record 10 year high of $725.
The gold-dollar coefficient was roughly around -0.87 before 2000 according to World Gold Council data. The coefficient became positive in 2005 but has now reverted back to its negative status. A negative correlation of 1 implies that for every unit fall in the dollar price would cause a unit increase in gold prices. Currently the figure is dangerously close to 1 at about -0.93. Many analysts foresee a correction of the euro which they posit is bound to devalue the dollar further.
However this is not a particularly bad thing. If crude prices are also considered then the picture brighten considerable. Since 1965, gold has traded at 15 times crude prices per barrel. Currently with crude trading at $63.43 per barrel internationally and gold at $645 per ounce, gold is selling at 10.17 times crude.
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