June 2008 Gold Update

The first quarter of 2008 saw gold in a bullish mood, as it charged past the previous record of $850 in 1980 to achieve an all-time high of $1,011.25 on 17th March. An abrupt correction left the end-quarter price at $933.50 but the overall average quarter price was also a record, at $924.83. In contrast to the fourth quarter, when gold prices in other currencies did not keep pace in percentage terms with the dollar price, gold prices in other currencies typically saw notable increases in the first quarter. The rupee price rose by 18% quarter-on-quarter, mirroring the US dollar percentage increase, whilst the rand price surged by 31%.

The increase in the gold price was primarily due to the sustained inflow of investor funds, as investors turned to gold as a safe haven. There were a combination of factors behind this move to perceived safer ground, not least of which were the heavy losses reported by major banks, and the collapse of Wall Street giant Bear Stearns. In addition, the fact that the greenback dropped to a record low against the euro, and oil and food prices continued to escalate, further helped to turn investors towards the yellow metal. It also remained an attractive investment against a potential slump in equity values in the event of a slowdown of the US economy; some spectators suggest that a recession in the United States had already started.

Where do you see gold going?

Source: Societe Generale and GFMS Ltd
Whilst every effort has been made to ensure the accuracy of the information in this document, Amante Jewellery cannot guarantee such accuracy. Furthermore, the material contained herewith has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient or organisation. It is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any commodities, securities or related financial instruments. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. Amante Jewellery does not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this document.