Date:21/08/2004 URL: http://www.thehindubusinessline.com/2004/08/21/stories/2004082102870600.htm

Back `Gold prices to remain firm in global market'

Our Bureau

Mr Kamal Naqvi, Head Commodities Research, Barclays Capital, speaking at the India Gold Convention 2004 in Mumbai on Friday. — Shashi Ashiwal

Mumbai , Aug. 20

GOLD prices in the global market may remain firm in the next 2-3 months, mainly because of continued pressure on the dollar, security threat and the next big launch of gold funds in the US, Mr Kamal Naqvi, Head of commodities research, Barclays Capital, said.

``Pressure on the dollar and the economic outlook of the US is not very strong. This will help increase demand for gold,'' Mr Naqvi told Business Line.

On price outlook, Mr Naqvi said if gold touches the $414-level per ounce, it could go up to $430 per ounce.

India's gold demand is likely to weaken during the current year, as agricultural scenario is not as good as last season and also, slower pace of the country's economic growth, he said.

Speaking at India Gold Convention 2004, he said that the rupee would be a major factor in trading interest in gold. In his inaugural address, Mr V. Leeladhar, Chairman and Managing Director of Union Bank of India, said India is largest importer of gold. The country's total demand is 840 tonnes, which is 20 per cent of world supply. Despite large imports, banks have small role to play in the bullion trade. Banks are not permitted to deal in bullion trade. The RBI should permit banks to trade in gold and also allow gold-backed saving schemes, Mr Leeladhar said.

Speaking on "Bullion Challenges and Opportunities", Mr Bhargav Vaidya, Director of the Bombay Bullion Association (BBA), said that there must be free two-way bullion trade. Free imports of bullion should be permitted at zero duty as like any other commodity. Also, free export of bullion should be allowed, he said. Paper bullion products, including gold and silver accumulation plans, should also be allowed, Mr Vaidya added.

Mr Sanjeev Agarwal, Managing Director of World Gold Council, recommended to "develop India as a regional gold trading hub".

Presenting a research paper on innovative investment product opportunities in gold, Mr Agarwal said that across the globe several investment options are available for the investors to park funds in gold. One can invest in gold through coins and bars, by opening a gold savings account, through gold accumulation plan, gold mutual funds and gold equities.