Gold is expected to rise to a record in the next six months as turmoil in financial markets boosts investment demand, said Paul Walker, chief executive officer of London-based research company GFMS Ltd.
Demand for bullion as a safe haven is growing in markets including India, the world’s largest gold user, amid the financial market crisis, Walker said in an interview in Kyoto, Japan, yesterday. The metal reached a record US$1,032.70 an ounce on March 17 as crude oil gains spurred investors to seek an inflation hedge.
US President George W. Bush and congressional leaders on Sunday reached an agreement on a US$700 billion bank-rescue package to shore up the financial system. The Senate will vote by tomorrow, lawmakers said. Concern that US credit market losses may widen will remain, Walker said.
“There are still lots of unanswered questions,” he said on the sidelines of an industry conference. “One thing is certain, that the US$700 billion plan is a reflection of how profound the crisis is.”
Gold for immediate delivery fell 0.4 percent to US$875.70 an ounce at 2:54pm. Tokyo time. The metal advanced 15 percent in the past two weeks.
“The physical market is extremely strong,” Walker said.
Premiums paid for 1kg gold bars, which normally range between US$1 to US$2 an ounce over the London market, recently surged to US$20 an ounce, he said.
Bullion for immediate delivery surged 11 percent on Sept. 17 as the US government took control of American International Group Inc in a US$85 billion bailout and after Lehman Brothers Holdings Inc filed for bankruptcy.
“Investment demand is driving prices higher,” Walker said. “What we have seen over the past couple of weeks is a flight to quality.”
Tanaka Kikinzoku Kogyo KK, Japan’s largest bullion retailer, said its sales of gold bars surpassed its purchases from local investors last month for the first time in 41 months as money was shifted from tumbling equity markets.
“Retail sales of gold bars continue to rise this month as the bankruptcy of Lehman Brothers and the troubles of other financial institutions strengthened investment demand,” Osamu Ikeda, general manager at the precious metals division of Tokyo-based Tanaka, said in an interview on Sunday.
Gold was decoupling from other commodities that are under pressure from a slowdown in global economic growth and raw material demand, Walker said.
Copper for delivery in three months on the London Metal Exchange fell 4.9 percent in the past two weeks on concern that demand would slow in the US, the second-largest buyer of the metal used in water pipes and electrical wires.
The US$700 billion rescue plan would probably weaken the dollar, providing a boost for gold, said Frank Holmes, chief executive officer of US Global Investors Inc.
“This is one of the most bullish factors for gold,” said Holmes, speaking yesterday at the London Bullion Market Association conference in Kyoto.
“This means you’re going to have debasement of the currency,” he said.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2