The Dubai International Financial Centre states: “Our results indicate that if a relatively conservative central bank should hold gold as an asset class, its potential returns of any given level of risk (i.e. at any standard deviation) increase by several points more a year than when excluding gold from its optimal portfolio. Similarly, a dollar invested (in January 1987) by a fictional conservative central bank in an international reserves portfolio would have grown to $6.6 by May 2010 – which is about 1.5 more times than an international reserve portfolio without gold."
“CEPS concludes that: “Overall, the main findings suggest that, in the near future, motives other than inflation hedging will be the main drivers of gold market dynamics. Growth in Asia’s emerging economies, which are among the largest sources of gold demand, and financial market uncertainty, will be the most important ones. In particular, Asia is expected to decouple at least partially from trends in the eurozone, even if the worst scenario were to materialise.
Hence, while adverse conditions could slow Asian growth, demand for gold from this region should not fall significantly. Moreover, even in the most optimistic scenario for the eurozone, global uncertainty will not evaporate easily. As a consequence, the gold price may continue to trend upwards for a period driven by investment demand from both private sector and official investors."