Monday, 5th June 2006 (4609 views)

The price of gold could be propped up by stronger than expected demand from Russia, a new report has suggested.

Gold has fallen considerably in recent weeks as investors move away from precious metals, but the Swiss bank UBS said Russian funds and investors were heading in the opposite direction.

The UBS report, seen by the Daily Telegraph, suggested that gold now accounts for up to 20 per cent of Russian investment portfolios. This is considerably higher that previous estimates.

"If our traders' experience is representative of trends in the wider market, this has very important implications for metals investment," John Reade, a gold analyst at UBS, told the paper.

Gold prices rallied on Friday, reaching $642 per ounce up from $630.50 earlier in the week.

This is still someway short of the $730 price that gold commanded last month.

Higher interest rates in the US are expected to make the dollar look a more attractive investment, pushing the gold price down over the coming weeks.

Experts predict that Russian demand could help halt further declines.

 

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