Here’re the reasons gold prices will rise again

Gold prices, which lost 20 percent of their value since early this month, will rise for four reasons, say analysts.

1. Physical demand for gold has not been this strong since January. Edel Tully of UBS said in a note to clients that “India stepped up to the plate as gold priced in rupees dropped 4 percent. Volumes on Friday were well above average and the highest since late August.

“Chinese buying was strong throughout the day as well, adding up to amounts we haven’t seen in a quite a few months,” Tully said. “This is also reflected in physical turnover on the Shanghai Gold Exchange, which is the highest since January.”

The analyst said there also has been strong physical demand from European retail buyers.

“And in a sign that fear levels are rising, the conversion of gold from metal accounts into physically allocated accounts was also evident, highlighting the underlying fear that will ultimately benefit gold once the air clears.”

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Posted by VBN on Sep 27 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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