
A specialized report has expected gold prices to rise on the long term despite present falls, as there is no sign the interest rate of the euro or the US dollar would rise in the foreseeable future.
Gold price is still 3.3 percent higher than the beginning of the year, though analysts expected a sharp drop to less than USD 1,200 for an ounce, the World Gold Council said in the report on Tuesday.
However, gold remains attractive for investors and sovereign funds worldwide and is still a hedging instrument against swings on the share and bond markets, benefiting from the rise in the GDP of some industrial and developing countries, especially in East Asia.
According to the report, a "disastrous" drop in gold prices is ruled out owing to reasons topped with the continuous fall in the US dollar and euro interest rate to near-zero-levels, which prompts investors to take gold as a hedge, despite the drop in prices of the precious metal.
As for the fact that the ounce did not fall to less than USD 1,200, the report explained that since the end of 2013 the yellow metal was able to contain the quantitative easing (QE) process in the US. This is why prices have not witnessed severe fall as some expected.
The most pessimistic analysts were strongly affected by the sharp rise in share markets at the start of the year, but this did not last for long, the report said.
On Monday, a gold ounce hit USD 1,229 following negative economic data from the US showing that the rise in houses prices was less than expectated.
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