13 April 2006

Gold’s bull run could reach $850

FT.com / Markets / Commodities - Gold’s bull run could reach $850: "The current bull run for gold could push prices above the 1980 record high of $850 a troy ounce, according to the Gold Survey 2006 from GFMS, the precious metals consultancy.
“Levels safely over $600 are now in our sights and further hefty gains over the next year or two are quite possible - in the right circumstances, the 1980 high of $850 could even be taken out,” said Philip Klapwijk of GFMS.
Gold is benefiting from a general rise in investor interest in commodities both for speculative purposes and as an alternative asset to equities, bonds and cash.
The success associated with investing in gold since 2001 is attracting new players, such as pension funds, and could bring a significant increase in new investment flows into a comparatively small market.
Investment flows are expected to be sustained by the the high probability of a sharp slowdown in US economic growth while greater global inflationary pressures and political tensions in the Middle East are also expected to be supportive factors.
A major surprise in the GFMS survey was a 100 tonne increase in jewellery demand last year. The survey found that this strength was confined to the first half of last year when demand rose 218 tonnes and there was a marked decline of 119 tonnes in jewellery demand in the second half. India alone saw jewellery output rise by 11 per cent or 61 tonnes last year.
However, high and volatile prices in the final quarter of last year led to a slump in global jewellery fabrication which fell 18 per cent compared to the same period in 2004. This weakness has continued into 2006 with price sensitive markets especially affected. Turkey, the world’s third largest manufacturer of gol"

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