Filed Under:  U.S. & World

Gold prices may get support from Apple’s future demand

Contributed by on March 16, 2015 at 2:28 am

gold prices risingThe sentiment toward the precious yellow metal is becoming more bearish, what with a very strong dollar hindering its rally. The dollar index is up by around 4% this month, while futures for gold are down by more than 4%. The fact that the second quarter of 2015 is drawing closer is also contributing to gold’s decline, since it would be the time when the Fed will most likely increase interest rates.

However, gold may soon be getting support from the most unlikely buyer.

Apple (NASDAQ:AAPL) , maker of today’s most popular line of smartphones and tablets, has announced its latest smartwatch called Apple Watch – which is literally the lovechild of luxury computer paraphernalia maker Razer and timepiece manufacturer Rolex. The Watch Edition, Apple Watch’s most expensive model, will have a casing made from 18k gold and a price tag of around $20,000.

While Apple’s announcement of its luxury smartwatches has made even the most dedicated of its fans skeptical about the new gadget’s success, precious metal analysts are quite confident that it will be able to support the work of miners around the world. Apple’s newest product will most likely be this year’s biggest catalyst of gold prices.

The inverse relationship of the dollar with gold isn’t the only catalyst that affects the precious yellow metal’s prices. Demand also plays a huge part. In an interview featured on BullionVault, Juan Carlos Artigas, Director of Investment Research in the US for the World Gold Council, said that gold may have had a huge price correction in 2013 but it also had a very strong demand from retail and emerging markets. In 2014, central bank purchases of gold also increased. This year, the demand for gold will most likely continue, and Apple’s backing of the yellow commodity for the manufacturing of its smartwatches will provide support for gold’s declining prices.

“If some of the sales and gold content projections are correct, the gold Apple Watch could soon gobble up nearly a third of the world’s gold production,” said Peter Krauth ofMoney Morning. That would make up more than 700 tons of gold, which is just below China and India’s consumption.

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