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Midday peak shows return of precious metal as popular alternative investment
September 11, 2009
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The commodity surged to over $1,000 per ounce ($35 per gram) for December delivery on the New York Mercantile Exchange in midday trading on Tuesday, though it pulled back and finished at $997.10 on Wednesday. It was the first time gold had broken the $1,000 barrier since February, and market watchers expect prices may rise even further. To capitalize on rising demand for gold, local banks and asset management firms are introducing financial products focused directly or indirectly on the precious metal. KB Gold Investment Bankbook at Kookmin Bank is one of them. To use it, customers deposit cash in an account, and then the bank buys gold on the international market with that money. Win Class Gold Banking service at the Industrial Bank of Korea and Dollar & Gold Bankbook at Shinhan Bank are similar products. Asset managers, meanwhile, are selling mutual funds that invest in gold or mining operations. PCA Asset Management’s Gold Rich Special Asset Fund bets on gold prices, while the Gold Mining Securities Investment Trust at IBK-SG Asset Management invests in mines. Some experts say even greater increases in gold prices are possible this month given the upcoming wedding season in India. Many Indians marry in October and buy gold as wedding presents a month earlier, driving up international prices and demand in September. Some believe that the new gold boom may weaken the value of the dollar. Heritage West Futures, a U.S.-based futures company, forecast gold prices would surge to $1,200 per ounce within the year. Other experts, however, forecast limited gold price hikes. “Compared with oil prices, which fell dramatically from a record high, gold prices are still maintaining a relatively high level,” said Yoon Chang-yong, an analyst at IBK Investment and Securities. “India’s demand for gold seems to have fallen because of the impact of the financial crisis, so continued rises in gold prices will be limited.” By Kim Won-bae [joe@joongang.co.kr] |
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