Commodity Online
DUBAI: 2009 seems to be the year of scrap gold. At a time when Gold prices are ruling above $900 per ounce, old gold has become the most sought after commodity in the bullion market now.

If you want any proof for that, just check out the scrap gold sales data.

According to global bullion analysts GFMS, around 500 tonnes of scrap gold was sold in the markets in the first quarter of 2009.

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High levels of scrap sales are particularly being reported in the Middle East where such sales have risen 140 per cent in the past six months.

In normal circumstances, 500 tonnes is the annual sales figure for gold scrap. In fact, for the first time in the past three decades, the amount of scrap sold has exceeded the amount of new Gold bought.

However, demand for gold jewellery has ebbed across the world. The World Gold Council recently announced the demand for gold as an investment product has surged the highest in the Middle East triggering sales of scrap gold.

According to market reports, demand for gold as investments has risen more than 140 per cent in the first four months of 2009 in the region.

GFMS said gold prices will average at $908.41 an ounce this year, up 4.8 per cent from 2008. Prices may cross the $1,000/oz mark this year with $1,100 an ounce a real possibility.

Evaluating markets in long term, a weaker US dollar and a potential build in inflation are likely to cause investors to increase their exposure to gold, ushering a rally into oil prices.

Official sale of gold will remain weak in 2009 as CBGA (Central Bank Gold Agreement) sales will remain below quota, GFMS said.

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