Gold has risen strongly in light trade since London re-opened on Wednesday.
Recovering its mid-December range around $630, it has also come into play as a "safe haven" after the UN Security Council voted on Saturday to impose sanctions on Iran due to its nuclear program.
"The market is now focusing on Iran and a slightly weaker Dollar to buy gold after seeing that it was solid around $620," said a trader at Mitsubishi Corp in Tokyo to Reuters on Thursday.
"The outlook for gold remains firm as the holiday-thinned conditions are expected to persist for the rest of the week," agreed Standard Bank in a report, "with recent developments in Iran likely to provide temporary safe-haven support."
Standard Bank says it expects gold's uptrend – now entering its sixth year of consecutive gains in terms of all major currencies – to continue in early 2007. Merrill Lynch has also restated its 2007 gold forecast of $675/oz, and raised its forecast for the following 3 years to an average of $650/oz.
But investors relying on Wall Street forecasts would do well to remember that two-thirds of the global gold market is driven by jewelry demand, with Indian consumers the world's No.1 buyers.
This week the World Gold Council (WGC) said it has chosen Bangalore to host its first-ever business-to-business jewellers show in India, the South India Jewellery Show (SIJS), in mid-February. "[That] month would provide a platform for the participants to place orders and receive their stocks well ahead of the marriage season in south India as well as to meet demand arising during the auspicious Akshaya Trithiya day,” one of the organisers noted to the Times of India.
It's not all chains and ear-rings, however. In fact, India's central bank may become a major force in the gold market in 2007. The story begins in England, and ends in Mumbai. To read it now, click here...