Gold gaining as physical demand said to be ‘Extraordinary’

London, Apr 19. Gold today extended gains above USD 1,400 an ounce on signs that jewellers and other users of the metal are taking advantage of the biggest slump in prices in three decades. Gold rose 2.6 per cent to USD 1,426.05 an ounce. Prices are down 16 per cent this year and dropped to USD 1,321.95 on April 16, the lowest since January 2011. Silver climbed 1.9 per cent to USD 23.70 an ounce, heading for a weekly slump of 8.8 per cent, the biggest such drop since September 2011. Prices fell to USD 22.07 on April 16, the cheapest since October 2010. Gold plunged 14 per cent in two sessions through April 15 on growing optimism that an economic recovery in the US will curb appetite for the precious metal as a haven. Prices also dropped on concern Cyprus may lead other European states in selling the metal from reserves, according to Goldman Sachs Group. Retail sales and jewelry demand soared in India and China, while the US Mint sold 153,000 ounces of American Eagle gold coins in April, a highest in three years. Holdings in exchange-traded products backed by bullion decreased for a thirteenth day to 2,348.099 metric tons, the lowest since January 2012. Gold will rebound from its two-year low and rally 29 per cent by December as scepticism over the recovery in the global economy increases demand, according to Indian jeweller T S Kalyanaraman. Bullion will gain to USD 1,800, Kalyanaraman, chairman of Kalyan Jewellers said. A rush in India to buy gold jewelry and coins will boost imports this quarter as traders and banks run out of stockpiles, Mohit Kamboj, president of the Bombay Bullion Association said yesterday. Daily customer traffic in Hong Kong and Macau rose as much as 25 per cent between April 13-16, said Chow Tai Fook Jewellery Group, the world’s largest jewelry chain.