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Nov 3, 2009
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Gold industry hails latest rise of 'barbarous relic'

Nov 3, 2009

EDINBURGH, Nov 2, 2009 (AFP) - The price of gold, which recently shot to a record high above 1,070 dollars, has a bright future thanks to improving demand caused by the financial crisis, industry experts said on Monday 2 November.

Gold struck an all-time high 1,070.80 dollars an ounce on October 14 as a sliding dollar made the precious metal cheaper for investors holding other currencies, pushing up demand for the commodity also used to make jewellery.

The price of gold has risen by more than 20 percent since the start of 2009.

"Not bad for a barbarous relic," Mark Lynam, an executive for AngloGold Ashanti -- the world's third largest gold producer -- told the London Bullion Market Association annual conference in Edinburgh.

"Although it's difficult to predict in the short term, the overall picture is very healthy."

Lynam pointed out that demand for gold was improving for a number of reasons, including the long-term threat of inflation -- a consequence of the financial crisis that erupted a little over a year ago.

At the same time, "a dearth of new discoveries" amid increased mining costs has dented the amount of gold on offer, added Lynam.

Meanwhile with the global economy far from strong, "physical gold is regarded as the only secure asset," said Mehdi Barkhordar, managing director of Swiss refiner and ingots producer Produits Artistiques Metaux Precieux (PAMP).

"There is a fundamental shift in the dynamics of the gold market," Barkhordar told the conference, adding that gold had become "mainstream."

London emporium Harrods last month surprised the retail industry by starting to sell gold bars, with prices fluctuating according to the current market price.

The smallest ingots, weighing one gramme, have sold for about 30 pounds (33 euros, 49 dollars) and the largest, weighing 12.5 kilogrammes, have cost more than a quarter-of-a-million pounds.

"Gold remains a safe-haven and preserves the value of investment," said Aram Shismanian, chief executive officer at the World Gold Council.

"It becomes an asset class in itself."

Shismanian also noted that pension funds were beginning to buy gold, describing the move as "a significant shift."

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