Demand from Asia 'could push up gold prices'

Gold demand from Asia could rise as investors seek to use the precious metal as a hedge against inflation.

This is according to John Reade, analyst at UBS in London, who told the Tehrain Times that buying will depend on what happens in the coming months with regard to inflation.

"Much higher Asian emerging market inflation could trigger a rush to gold as a hedge against domestic currency weakness and declining purchasing power,” he said.

Wholesale prices in India are rising at the fastest pace in 13 years, while consumer prices in Vietnam climbed 25.2 percent in May and inflation in China reached a 12-year high in February.

Demand for gold investment has risen in recent months, particularly from developing countries, which are seeking to emulate the success of western investors in the gold bullion market.

Meanwhile, the output of gold globally may soon be unable to keep up with demand for the metal, with many mines showing lower production rates in recent times, especially in South Africa. This could in turn have supportive effects for gold prices.

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