The World Gold Council (WGC) on Friday said the recent fall in gold prices
was driven by speculative traders in the futures markets.
WGC is the market development organisation for the gold industry. Its members include gold mining companies.
It also mentioned that lower prices boosted demand for the precious metal from India and China to the US, Japan and Europe, while supply remains constrained as there is already shortages of bars and coins in Dubai.
"It has become increasingly clear
over the course of the past week that the fall in the gold prices was triggered by speculative traders operating in the futures markets," UK-based WGC CEO Aram Shishmanian said in a statement.
Speculators' short-term view of generating a trading profit is in stark contrast to the views of long-term investors in gold, he said.
Stating that gold purchases surged in markets like India, China, the US, Japan and Europe, the WGC chief said: "Buyers are viewing this as an opportunity to purchase gold at prices not seen in the past couple of years."
There is a massive wave of physical gold buying
since last weekend and demand was accelerated after the prices fell further on Monday, he added.
In Singapore, gold had touched $1,321.95 on April 16, the lowest level since January 2011. It is ruling at $1,415 per ounce on Friday.
With demand rising in most markets, Shishmanian said: "We are already seeing shortages for bars and coins in Dubai, while premiums in Mumbai are at $26 per troy ounce and $6 in Shanghai, indicating that buyers are willing to pay more than current spot prices for the metal."
Gold operates on the basic economic fundamentals of demand and supply
, he added.
"Our view is that demand is strong, while supply remains constrained, and that this dynamic ultimately drives the long-term price of the metal."