By Kim Kyoungwha
July 30 (Bloomberg) -- Gold will revisit $1,000 as investment demand and jewelry purchases rebound and supply decreases annually, a senior World Gold Council official said.
“On the supply side, gold mining production has been decreasing at a rate about 4 to 5 percent per year after reaching a peak production in 2001,” Jason Toussaint, managing director of exchange traded gold, said today. “Even if demand stays the same, prices must go up.” He declined to give a timeframe for the increase.
Gold, traditionally a popular hedge against financial turmoil due to its store of value, has risen 5.7 percent this year and briefly traded above $1,000 in February. It reached a record $1,032.70 on March 17, 2008.
“Investors are much more focused on wealth preservation than upside returns because they are much more focused on risk management within portfolios,” Toussaint said in an interview at a Singapore conference. “We will see that continue.”
Demand for gold will also rise as pension funds, sovereign funds and other asset managers seek to preserve their wealth against inflation, Toussaint said. Only 3 percent to 5 percent of assets at large institutions are allocated to gold, he said.
“Many pension funds around the globe do not have any exposure to gold currently,” he said. “The feedback that we’ve got so far is positive,” he said without elaborating.
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