Gold Corner January  2008 Gold Overview Gold is off to a flying start in the New Year supported by higher oil prices and volatility in the global currency markets. There was significant fund buying interest in gold in New York and London markets when the Gold prices approached the all time high of 850 $/oz last seen around 28 years back. Indian Gold prices touched 11,000 Rs per 10 grams for the first time ever on 3rd January 2008 Gold price movements have been extremely volatile towards the end of 2007. This is mainly attributable to volatility in the US Dollar which surprisingly appreciated towards the end of the 2007 against major global currencies. Historically, gold prices have shown negative correlation with the value of the US Dollar. This is due to various Macroeconomic and Quantitative factors which are somewhat subjective in nature but tend to hold influence over the investment community over longer term. The leading currency analyst across the globe somewhat remained divided upon the direction of the US Dollar towards the end of 2007 which further lent volatility to the currency markets which in turn affected the gold prices. Gold demand in India and Middle East the two most important gold consuming centres in the world remained firm in 2007. The actual gold consumption figures from both India and Middle East in 2007 are eagerly awaited and any surprise on the upside would be very bullish for the gold prices. Meanwhile, the physical off-take in India remains weak at the beginning of this year as volatility in gold price is keeping away physical buyers from the market. Outlook In the past few months Gold prices have ignored a resurgent US Dollar and weak physical off-take and have rallied strongly. There has also been increased buying interest from Technical Funds after the gold prices crossed the 850$/oz level. All these factors point towards higher prices in the near term. However, as always expect a bumpy ride as volatility and liquidity would move in opposite directions if the prices move up further. The threat to gold prices may come from lower physical off-take, stronger dollar and fall in crude oil prices. While the weak physical off-take in not a worry as of now, however the near term direction of US Dollar and Crude Oil prices would depend upon the economic and Oil Inventories data respectively, coming out of the USA. By : Mr Vikram Dhawan - Head of Commodities * Disclaimer The information contained herein is the independent and personal view of the author and should not be construed as an investment advise or a standard investment procedure and are not the views of the Company. Neither the AMC, the Trustees, the Fund nor any of their affiliates or representatives assume any responsibility for the authenticity of such information.