For the bullion market as a whole, the main challenges are to respond appropriately to the various regulatory pressures that have been generated by the financial turmoil of the past two years, comments Stewart Murray, Chief Executive of London Bullion Market Association (LBMA), who will be speaking at the 7th Dubai City of Gold Conference on May 2nd at the Almas Tower. The jewellery industry on the other hand is facing very different challenges, including possibly having to contend with a sustained period of high prices and low consumer spending on jewellery.
"Gold has always been regarded as the only major asset class which is no one else’s liability," he said. "However, at times, it has suffered from its dual nature as a commodity and an investible metal. When the supply and demand fundamentals have been perceived as poor (unlike recently) and when the return on holding gold was much lower than that for other investment vehicles, the incentive to hold gold has been much lower than it currently is.
"Gold’s value as a safe haven depends very much on whether people who do not hold it wish to buy it and whether people who do hold it wish to sell. Such decisions depend as much and perhaps more on the conditions in the wider economy than on the supply demand fundamentals of gold itself."
At the one day international conference organised by Dubai Gold & Jewellery Group, Walter De Wet, Head of Commodities Research, Standard Bank Plc will speak on "Gold Outlook: A physical demand perspective". He will focus on how different the 2010 physical gold market to date has been compared to 2009 and how that may impact as a driver for metal moves throughout this year.
According to Alison Burns, Regional Head of Precious Metals MENA at Standard Bank Plc, Dubai Branch: "As far as the main challenges facing the gold and jewellery industry are concerned, we would suggest that market participants need to pay attention to the continued likely volatility of the metal prices this year which as usual would suggest the need to hedge stocks and any other open positions. The overall current global economic environment will continue to throw up increasing further challenges in terms of consumer demand but we feel confident that if the market rallies together at events such as the 7th Dubai City of Gold Conference and share suggestions for improving turnover and profitability that such challenges can be certainly better mitigated against."