[Prince Forex]

gold prices in saudi arabia

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Is the gold price bubble ready to burst?

In recent weeks the price of

has seemed to defy the laws of gravity, making fresh trading highs every day before hitting a record above $1,900 an ounce in mid-August.

price rise of gold ended abruptly with a sharp two hundred

sell off shortly thereafter and has continued to experience increased volatility with $50

swings. The

volatility raises concern that the uptrend in gold is ending and the

rise may

a bubble that is about to burst.


The

driver for the price of gold is

flow seeking a safe haven and

hedging against

. Global concern about sovereign debt risks in the US and

and uncertainty about the

are the

risks

demand for gold.

According to the World Gold Council,

for gold remained strong in the second quarter of 2011. China and India

the largest buyers of gold; however the World Gold Council reports that

was one of the top

buyers in 2010, but demand has declined by 21 tons in Q2 2011 or 16% below the

year’s levels. The

demand for gold from the Middle East region has been

to the rising price of gold and continued regional unrest

purchases of

jewellery. saudi arabia is the largest jewellery producer in the

using 140 tons of

a year.


The

for

remain

with prices likely to find support from three major

; portfolio diversification,

against inflation/

risk and central bank

. Investors will

to look to gold for portfolio diversification

it is not

correlated with most other ***ets.

nationals

significant US

***ets and

of the US

rating,

with

equity

volatility, makes

an important

of an

portfolio to

and manage

.

easing

the Federal

and weakening of the US dollar are major factors

the

of gold. With US interest rates at a record low, and the

budget

expanding at a

pace, the US dollar faces an increased risk of

.

has

as an

to the US dollar and other

.

around 86% of

revenue coming from

and oil

in US

, gold is also

used as a hedge against a

US dollar and to diversify US dollar reserve

in

.

In addition, the

recently warned of the risk of

inflation in

, which also reflects

food

and

.

bank

for

is rising as

add gold to diversify their reserves. The World Gold

reported

June

Arabia doubled its gold reserves to 322.9 tons from 143

in 2009.

The Saudi central

is ranked

among world

banks in

to their

of gold reserves.


Although the

suggest that gold prices may be

, some economists warn that the sharp price rise and

volatility in the

of gold makes gold less of a safe haven and risk

are the only

that

be deployed in the gold market now.

may

flows and pave the

for more short-term

in

.

as

uncertainties remain unresolved it is likely

,

,

and investors will continue to buy

to try to

their

.

Forex trading involves substantial risk of loss. Do not invest money you cannot afford to lose.
EF Worldwide Ltd, registered in Guernsey
Nicolas Shamtanis
Dealing Room Manager
easy-forex

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gold prices in saudi arabia