Gold prices down on strong US dollar, decreased demand
By Jin Jing (China Daily)Updated: 2006-12-20 09:39
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A dealer looks at a computer screen to monitor
the changes of the gold prices at the Shanghai Gold Exchange.[China
Daily] |
Gold prices in Shanghai continued on their downward trend yesterday, taking yet another hit after a sustained drop last week.
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Total trade volume of gold fell 9.99 per cent to 12,290.00 kilograms last week at the bourse, with a daily turnover of roughly 2,458 kilograms.
"The fall of the gold price is mainly because of the strong US currency in the international market and the decrease of gold demand in the third quarter this year," said Zhang Cheng, an analyst from Jingyi Futures.
According to statistics from the World Gold Association, gold demand in the third quarter this year fell 3 per cent from the same time last year. Jewellery demand fell 4 per cent, investment demand fell 10 per cent, while industry demand rose 5 per cent.
The Shanghai Gold Jewellery Trade Association adjusted its benchmark price for Au9999 from 177 yuan (US$22.12) to 181 yuan (US$22.62) per gram on October 24 this year, and kept the price unchanged until now.
"The small adjustment of the gold price in recent days will not lower the confidence of buyers," Zhang said.
Despite the fall, the gold market saw a slight increase in the short term due to the typical rise of gold demand at the end of the year, according to Zhang.
"The gold price is expected to rise in the long term because of the expected increase in investment and the strict global situation," said Zhang.
"The gold price will probably rise nearly 20 per cent next year because of the expected drop of the US dollar in coming years," said Qin Weihuan, an analyst from the Gold Economic Centre.
The US currency dropped from a three-week high on Monday after a report showed deteriorated confidence among US homebuilders in December.
The dollar will drop against the euro through the end of this month as a slump in housing will slow the US economy, according to Bloomberg.
In the international market, the gold price reached US$615.70 at 6pm Beijing time yesterday. The gold price in Asia had fallen for weeks and picked up recently. On December 1, the gold price reached its highest price of US$649.90 in the past 16 weeks.
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