Gold Price Could Hit $1,600 per Ounce

Source:

"The potential for U.S. dollar weakness is among the most compelling factors supporting the rally."

The head of a leading gold mining company has predicted that gold prices could hit $1,600 per ounce in the medium term, Reuters reports.

Gold is well-known for the inverse relationship it shares with the dollar but it has also shown signs of following similar price movements to oil in the past few years.

Nick Holland, chief executive of Gold Fields, which is the world's fourth-largest gold producer, has explained that this trend could see the yellow metal continue to soar.

"Some people say oil is going up to $100 a barrel in the next 6 to 18 months," he told the news provider.

"If that's true, and if you look at the long-term relationship between gold and oil, you should find that gold would go to $1,500 to $1,600."

In addition, Mr. Holland noted that global supplies of gold are declining as high-quality exploration projects are scarce at present—another bullish factor for gold prices.

Meanwhile, James Steel, an analyst at HSBC, which is the world's largest banking group, has focused on the plight of the dollar as a considerable incentive for buying gold.

He said in a note: "The traditional inverse relationship between gold and the U.S. dollar appears to have been re-established during the current gold rally.

"The potential for U.S. dollar weakness is among the most compelling factors supporting the rally."

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