By Manolo Serapio Jr. and Rujun ShenReuters Thursday, July 21, 2011
SINGAPORE -- Gold fever is gripping Asian investors and could spread to central banks as global growth uncertainties tarnish the appeal of other assets, putting bullion on course for more gains but also provoking fears about supply.
Spot gold surged more than $100 in 11 straight days to Tuesday, its longest winning streak in four decades, hitting a record $1,609.51 an ounce, as debt default fears in the United States and Europe drove investors to seek safety.
Gold stayed above $1,600 on Thursday as market watchers remained cautious about the debt situation on both sides of the Atlantic.
Asian giants India and China, the world's two biggest consumers of the precious metal, expect to see demand continue to climb for the rest of the year, as growing wealth and stubbornly high inflation make bullion an attractive asset.
"Record high prices won't scare away investors," said Shi Heqing, an analyst at Antaike, a state-backed metals consultancy based in Beijing.
"Investors are likely to chase the rally and continue to buy gold because paper money feels increasingly worthless and they are worried about inflation."
Shi expects China's gold demand to rise about 20 percent to near 700 tonnes this year from 570 tonnes in 2010 as Beijing struggles to tame annual inflation that hit a three-year high of 6.4 percent in June.
In India, the wedding season in mid-August is expected to drive up sales of gold, a fixture in dowry and gifts.
"The case for gold in the longer term is still very strong. Gold may appeal to new classes of investors who previously avoided the market in favor of more mainstream investments like bank deposits, bonds and equities," said a Singapore-based trader.
"Potentially there's a whole new market for small-sized physical gold bars if these investors lose faith in paper.".....read on
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