Going for Gold

Last week the price of gold climbed to a 16-year high. The price for gold shot to $452 (GBP251) an ounce in London trading.

The new data was published by the World Gold Council. The news was followed by Japanese investors storming the gold market. Senryobako, the wooden treasure boxes filled with gold bars or coins, are much in demand in Japan and, according to the Council, fuelled the Japanese buying spree by 71% to almost 52 tons tonnes in the first nine months of 2004.

Hedge funds are betting that the price of gold will rise to GBP265 an ounce by the middle of next year. Partly because of the positions the funds are assuming, the price of gold has already risen by over 13% since September. The price surge is also due to the fact that investors take refuge in gold when the dollar is weak.

According to the World Gold Council, the production of gold fell by 22% to 828 tonnes in the third quarter. Sales from central banks fell by 42%. The demand during the third quarter meanwhile soared by 8%.

British jewellers have promised to maintain previous gold prices to encourage holiday season shoppers this year. Manager of Asprey, Christopher MacDonald, said that prices might rise next year if gold was to remain at GBP265 for an extended period. However, prices would not be affected this year.

Most jewellers like Asprey, Mappin & Webb, the Signet Group and Asprey & Garrard bought their Christmas stock in advance. The Chief Executive of the National Association of Goldsmiths said that retailers are likely to absorb small price fluctuations. He said that any price adjustments would be made in the spring.