Gold Merriness to Go Through Christmas Season - Gold is expected to replace platinum in automotive catalysts? - By Rama Chandra Sahu 21 Dec 2007 at 09:30 AM GMT-05:00
NEW DELHI (CommodityOnline.com) -- The yellow metal continues to attract investors’ zest globally as the commodity market gains more strength thanks to price performances of select commodities setting new records on reaching multi-year highs.
By the end of 2007, credit crisis concerns in global financial markets would be cleared out and the geopolitical tension coupled with additional catalysts has the potential to continue the drive of the gold price afresh a 28-year high.
Strong physical and investor demand emerging upon price dips should provide a solid footing for prices coupled with sustained ETF positions.
This outweighs the two bearish factors for gold: one, a slowdown in producer de-hedging and pick up in central bank sales and secondly, speculative length in gold is high and there is potential for short-term price correction, but chances are strong in the medium and long term.
Indian jewellery demand rose by 70% during the first half compared with the same period last year. Domestic consumption increased to 387 tonnes from 227 tonnes during the same period. Rising disposable income of middle class people and the strengthening of the Rupee by around 10% also made the yellow metal more attractive to surge the demand.
Industrial consumption for gold has also increased during this period. The automotive industry is adopting breakthrough technology that would allow use of gold to reduce of emission.
Gold is expected to replace platinum in automotive catalysts. According to international projections during 2007, 4.24 million ounces, or 119 tonnes, of platinum was used in automotive catalysts. Using gold in this sector at nearly half of the price ($800/oz) will further reduce the use of platinum.
Expect the overall sentiment to remain bullish. Unless the U.S. markets take some more steps to post up side economic growth, the gold price may test around $900/oz in the middle-term.
Rama Chandra Sahu is a Senior Commodity Analyst with Voguestock Ltd.
By arrangement with www.commodityonline.com.
If this is a true fact, there is no way that the supply will equal the demand -
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