Gold in Surplus, but Still Trending Upwards

After a brief drop in gold prices, gold is again on the uptrend, with speculators pushing up the price close to $570 USD per oz. The $600 USD psychological barrier is not far away. With the uncertainties of US-Middle East politics, oil supplies, inflation and the US economy, precious metals are all trading at their highest in 20+ years.

However, some are saying that this will probably be as high as gold will go in the next few years. If we look at it from a purely demand/supply point of view, gold output actually surpassed physical demand in 2005. This is not surprising; the gold jewellery market is highly price elastic. Gold is now highly sought after in industry, but again, this is dependent on global demand for electronics and other gold-related products.

The main drive has been speculation. Pure and simple. Sometimes, that is usually enough.


Sources:
Futuresource.com
Thehindubusinessline.com