last week i was reading the article , published on Feb 27, 2009 in The Market Oracle which predicted the gold price above $1000 level based on the supply and demand impact and today i seen in a news that gold price pass the $1000.00/oz mark which is the highest price level. Price is truly related to the supply and demand of gold. In article author mention the following comment. " We conclude by emphasizing that demand through gold Exchange Traded Funds will dominate the gold market and take gold to new heights well above $1000."
According to the article total projected demand for 2009 is 3,493.40 to 4,171.02 tonnes. Where as the supply are 3,493.40 tonnes. That means the demand is higher then the supply. Article also shows the data of Gold supply from mine production, scrape and Central Banks. From article i can see the new pattern of gold demand. people are investing more in Gold. so investment demand rise by 40% to 702.8 tones. article indicate the big change in the Gold E.T.F which will rise up to 677.62 to 1,355.22 tones.
In my opinion there are many factors affect the gold price. In developing countries people are buying more jewelery, I think fear of inflation, recession and weakness in dollar also increase the gold price. As per economic principle when price will go higher then demand will be going to decrease. so i think in near future the demand of gold is going to decrease.