Analysts at UBS, the major Swiss bank, see good prospects for a rising gold price in the coming months – if the seasonal effects take hold and the upward trend continues.
Gold price in autumn
Whenthefinancialworld was notyetpermanently in crisismodeandthecentralbankswerenotforced to intervenepermanently in themarkets in order to keepthebusinessrunning, theseasonalcomponent still played a majorrole in thedevelopment of thegoldprice. Eventoday, demandforgold in AsiausuallyrisesmoresharplyfromOctoberonwards. Indiahasimportantholidays in storeduringwhich a lot of gold is traditionallybought. These includeDiwali (the Festival of Lights), which is celebratedthisyear on 30 Octoberand is a legal holiday in India. Furtherfestivalhighlights will follow in November.
India as a driving force
In the run-up to these events, Indian gold traders are stocking up. There is more demand for gold on the international markets. This is good for the price of gold. Especially when the Indian rural population, which is responsible for up to 60 percent of India’s demand for gold, announces that they will receive a lucrative income. And currently the conditions are good, due to the recent heavy monsoon rains. Statistically, November is one of the best months for the price of gold. If the price comes back a little during this phase, as it is at the moment, this can further stimulate demand for gold.
China and the upward trend
A recent analysis by the major Swiss bank UBS also points to these interrelationships. China plays another important role in this. One can see a growing interest in gold on the part of investors. One refers to strong inflows of funds into gold ETFs and futures trading activities at record highs on the Shanghai Gold Exchange. According to MiningNews, UBS analyst John Teves explains: “As the gold price is holding up well, fears of missing something are rising. This is encouraging and means that any downward pressure exerted by macroeconomic factors later in the year is likely to be absorbed by fundamental demand. He expects the continuation of the uptrend in gold to attract more investors and speculators. And that supports the price of gold.