Clues to the Direction of Gold Prices

March 5, 2010

Two weeks after the IMF said it would sell 191 tonnes of gold, prices are up over $20/oz. on speculations that China would be the buyer. A week later, a researcher from a think tank under China's central bank emphasized China's need to invest in gold over the long term, but neglected to comment on the speculations. Is this a mere coincidence?

Here's another one: the IMF's announcement came just a day after the World Gold Council (WGC) sighted an 85% increase in gold ETF demand in 2009 over 2008.

And how convenient was it for billionaire investor George Soros to increase his stake in GLD (gold ETF) by over 150% at the same time?

Is this all telling us something about the direction of gold investment in 2010?

You'll recall that when India's central bank bought the IMF's gold last year, the price of gold skyrocketed to an all-time high of $ 1,226/oz. in a month's time. Now, China's central bank might be the buyer, but India's private sector has upped their gold buying activities as well, as we recently learned that its January gold imports rose 1900% over the same month in 2009.

Thus earlier this week, gold reached record highs in Indian Rupees and even Euros on increased demand. So, are record highs in dollar terms imminent?

This article was originally published by Investinations on www.argmaur.com.