Gold Investment demand faces possible headwinds from rising interest rates, according to a leading analyst, but the current financial and economic climate looks set to support prices.
"Economic conditions still seem to favor such growth in Gold Investment demand over the balance of this year," said GFMS consultancy CEO Paul Walker today in Moscow, launching the group's new Russian-language edition of its highly-respected Gold Survey report at an event co-hosted by the state-owned Gokhran repository and leading commercial bank Sberbank.
"The real risks for gold in the medium term lie in a serious tightening of monetary policy in the United States and Europe," Walker said, "but currently the investment climate for the metal still appears favorable."
Noting at the Economist magazine meantime that low interest rates, high government deficits and currency depreciation make an "unsustainable" combination, former FT columnist Phillip Coggan writes in his Buttonwood column today that the long-term rise in Gold Prices is "in effect, a devaluation of the Dollar.
"When explaining shifts in the Gold Bullion market, people tend to think in terms of supply and demand. Perhaps, however, they should view gold-price movements in terms of investors' confidence in the Dollar, and in paper money in general."
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