World Gold Council announces investment demand for gold has risen

With gold peaking new, all-time high in history, the issue of how retail investors can benefit from this robust performance has come into the limelight. As also, how it has affected the general life of those who depend on its presence in their lives. The dollar has recently been weakening while gold continues to surge. Investment banks have raised their gold forecasts on expectations that a weaker dollar and inflation will lure investors to buy the metal as a hedge. The study showed that gold was a better hedge against the dollar than other commodities.

This comes as no surprise, as the golden metal has always been considered to have an inverse relationship with the currency, the study pointed out. This has been attributed to the 'flight to quality' tendency on the part of investors which means, that during times of uncertainty in the financial markets and the world economy, investors move their capital away from riskier or more volatile assets, into more safer, less volatile ones. Further analysis indicated that gold is the commodity that demonstrates the strongest link to the dollar.

Examining the superior properties of gold that make it the best hedge, it pointed out that two of these were, the fact that gold as an asset bears no credit risk and that it is durable. And gold's most important advantage was of course its legacy as a monetary commodity. This being the reason why, after an initial dip in buying gold, customers are once more packing shops to buy gold jewellery. And long term investors are rediscovering the lasting diversification attributes of holding gold within a portfolio.

'There has been a noticeable surge in gold jewellery purchases by customers, despite the increase in gold rates. People have realized that the boom will not see a sudden crash, and so are returning to the gold shops. Young people who are buying gold for their marriages, are diverting money from unnecessary expenses towards buying gold, which is seen as a more bankable asset for their future', said Mr. Moaz Barakat, Managing Director for the Middle East, Turkey & Pakistan, World Gold Council.

With general positive consumer sentiment towards gold rise, the metal has once again proved its bankable aspect as the best hedge in a volatile market.