Is it a Gold Bubble ? Not Yet says Nirmal Bang

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Our outlook depends on dividing the world of bullions into two halves - investment demand and jewelry/physical demand. The indicators  affirm our conviction that investment demand would remain alive in Western countries backed by a weaker dollar and the onset of inflation in the US. China would play a very significant role in taking this metal higher from these levels. The kind of fall witnessed in the dollar recently must have given jitters to the Chinese authorities. This development may compel China to intensify buying in gold to convert a significant part
of their foreign exchange reserves in gold. In addition, a decline in sales by Central Banks and reduction in hedging positions by gold producers indicate that they too are expecting higher prices. An improvement in jewelry demand by non-western buyers like China, India and Middle East would be a bonus. We are of the firm view that gold will touch the levels of $1100 per ounce in the near term

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