Poh Kong Holdings Bhd, the biggest jewellery retail chain in Malaysia, expects the price of gold in global markets to increase to US$1,800 an ounce by year-end on the back of growing sentiment toward security assets including gold.

Currently, gold is sold at US$1,770 an ounce (one ounce = 31.2 grammes).

Executive director Ermin Siow said the price would remain bullish until 2015, and next year it would definitely exceed US$2,000 an ounce.

Speaking at a media briefing on ‘Overview of Gold Demand Trends’ today, Siow said continued concerns over the US economy and other major countries like China will certainly be the driver of gold prices in future.

“Although more than 60 percent of world trade is transacted in the US dollars, the uncertain recovery of the US somehow puts limits on its gains.

“The quantitative easing three (QE3) implemented by the government also did not show any signs of improvement to the country’s economy, so this pushed investors to buy more gold instead of the US dollar,” he said.

Siow also noted the rising trend of buying gold for investment, which lifted the metal’s prices recently.

Investment a major driver

Global demand for gold for investment purposes rose 14.4 percent for the year ended June 30, 2012, accounting for 37.5 percent of the total of 4,455.8 tonnes taken up, from the same period in 2011.

This was followed by demand from the jewellery sector of 41.2 percent, official sector purchases 11.4 per cent and the technology sector 9.9 percent.

For jewellery purposes, demand however declined by 13.2 percent.

“Investment will remain the major driver of prices in 2012,” he said, adding that this factor could be the catalyst for gold demand in the long term.

Siow said domestic annual consumption of gold was estimated in excess of 20 tonnes worth RM4 billion despite lower annual production of only five tonnes.

Total exports of jewellery (gold, silver and platinum) last year increased by 8.8 percent to RM5.841 billion from RM5.368 billion in 2010, with the United Arab Emirates being the largest export market.

China, the largest gold producer in the world based on its potential gold reserves, is also the biggest market for the commodity due to its large population base, having overtaken India last year, while Vietnam and Thailand have risen to be significant markets.

- Bernama