Gold has again proven its core investment qualities as a store of value, safe haven and portfolio diversifier and this has struck a chord with nervous investors. Gold price continued to trade near a seven- month high of over the $1,000-mark last Friday, as it consolidated gains before tackling new peaks.

Majority of precious metal analysts say that amid the global economic slowdown, gold prices may continue to remain bullish during this week on continued buying by investors and fund houses, including Exchange Traded Funds (ETF). Gold prices in the London market have risen sharply by nearly 11% over the past seven weeks, on the back of strong investment demand, while the yellow metal gained about 5% during the last week as investors seek an alternative to stocks and bonds.

“Gold prices have touched $1,000 an ounce on Friday as major funds are going long in gold while taking short positions in currency trading. I think price may continue to rule higher and likely to see $1,033 an ounce in the international market.

One can also see a major correction after reaching that level,” Bhargav Vaidya, a leading bullion analyst told FE. In the domestic market, prices have also shot up in 2009 from a low of Rs 12,767 per 10 gram to a recent high of Rs 15,706 per 10 gram.

Local prices on Friday firmed at Rs 15,600 per 10 gram in the middle of the wedding season, with scrap meeting most of the little demand.

“There is no new fresh buying of gold jewellery. Import of gold also remained negligible in the current month. I think gold prices may continue to rule higher on sustained buying by investors,” said Prithaviraj Kothari, a leading bullion dealer and managing director of Riddhi Siddhi Bullion Ltd.

It is interesting to note that the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust said its holdings hit a record 1,028.98 tonne last week. Investment in silver ETFs has also been strong, with holdings of the world’s largest, the iShares Silver Trust, jumping nearly 3% to a record 7,873.75 tonne last week.

“The outlook for gold remains positive as economic turmoil prevails and investors keep buying gold due to its safe haven appeal. The latest deteriorating economic signs included last Thursday’s close of the US Dow industrials index at its lowest in more than 6 years. Gold has decoupled from the dollar. The powerful negative correlation between gold and dollar is very evident visually as the dollar surged against other currencies but gold held its own way,” Debjyoti Chatterjee, analyst with MAPE ADMISI Commodity Research said.

“I anticipate that gold, as a unique asset class, will continue to play a vital role in providing stability to both household and professional investors around the world,” Aram Shishmanian, CEO, World Gold Council, said.