The yellow metal continued to witness upside momentum on Thursday as demand for the metal was boosted on the back of inflation concerns and escalating issues in the Middle East.

Spot Gold prices gained 0.6 percent yesterday to close at $1383/oz. But prices on the MCX barely managed to close in the green as Rupee appreciation affected gains.

The WGC said that gold demand is expected to remain high this year from major consumers, India and China. Rising income levels and high savings rates will continue to keep demand high in these countries.

But jewelry demand from developed economies will depend on economic growth. Inflation in the UK jumped to twice the Bank of England’s (BOE) target inJanuary. Due to this, BOE Governor Mervyn said that interest rates may rise in the near future. But gold holdings in the SPDR Gold Trust fell to its lowest in nine months to 1224.008 tonnes by 15th February.

Outlook

Gold prices are expected to rise further, on inflation and geo-political concerns. Dollar weakness will also support prices, making gold look attractive for holders of other currencies.

Courtesy: Angel Commodities

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