Gold Could Hold Above $1 000/oz for 'Extended Periods'

Source:

"The surging investment demand for gold as a 'safe haven' investment is unlikely to abate this year."

The gold price is expected to continue to trade with a high level of volatility in the next six months, and could top the psychologically four-digit market for "extended" periods of time, Australian equity researcher Resource Capital Research (RCR) suggested in a report this week.

"The surging investment demand for gold as a 'safe haven' investment is unlikely to abate this year," said RCR senior gold analyst Tony Parry.

"Even if it is considered 'safe to go back into the water' with equities, current stimulus spending, money printing and corporate rescues, and the resultant record budget deficits, particularly for the U.S. economy, will produce the 'X Factor' that all gold bulls thrive on - fears of a re-emergence of strong inflation and a collapse in confidence in the U.S. dollar," he continued.

In its latest quarterly report on junior and mid-tier gold companies, RCR predicts that gold will trade between $900/oz and $1 050/oz in the next six months.

RCR noted prices have experienced "considerable volatility" in the last two months, falling to $898/oz on March 10 before rising to $954/oz after recent announcements from the US Federal Reserve, "confirming major bond purchases with 'printed money.'"

Although jewelry and industrial fabrication demand for gold was relatively weak in 2008, falling 10% from 2007 levels, the price was buoyed by strong investment demand, as well as bar and coin hoarding in the second half of the year, and particularly in the first two months of 2009, RCR said.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe