Gold prices will rise this year and next on renewed dollar weakness, strong investment and global security jitters that will confirm its status as a haven for money, a Reuters poll showed on Monday.
The global poll of 30 analysts and senior traders arrived at a median average gold price of $433.25 per troy ounce in 2005, up 0.75 percent on a similar poll conducted in January and up 4.8 percent on 2004's average bid price of $413.56.
The rising trend was seen spilling into 2006, with analysts predicting an average of $450.00, a sharp reversal from the January poll, which saw prices falling back to $413.00. The highest forecast for next year came in at $500.
"Under our broader economic scenario of slowing growth, the dollar is likely to come under renewed pressure in the second half of this year and that should lead to gold surprising on the upside," HSBC metals analyst Alan Williamson said.
Platinum group metals (PGMs) were tipped as the weakest performers this year, with platinum prices seen up just 1.5 percent, while palladium was expected to drop a hefty 11.9 percent from 2004.
Silver was seen as the star performer among precious metals, with forecasts revised up more than seven percent from January to an average of $7.00.
Bullion's cyclical move higher started from its 2001 near-20-year lows, fed by a mix of dollar weakness, security risks and producer buy-backs of reserves in the ground that had previously been sold forward. Spot gold was trading above $421 on Monday. Forecasts were widely spread on this year's price - with the highest at $462 and the lowest at $412.
DOLLAR-GOLD TOGETHER AGAIN: The dollar's direction had been the most dominant factor behind gold's rally, with the metal scoring a 16-1/2-year peak last December at $456.75 as the euro spiked to a record high versus the US currency.
But last month bullion detached itself from the dollar/euro to rally as the single European currency fell on French and Dutch rejection of a European Union constitution.
Bullish gold commentators broadly had low expectations for the dollar, seeing further weakness despite this year's rally as the United States struggled to square its trade and current account deficits.
A Reuters poll of currency strategists on July 6 showed a mid-range 12-month forecast for the euro at $1.2700 compared with current levels around $1.2065.
"The relationship between gold and the euro, recently fragile, may well reassert itself after the German elections (expected in September)...this may go some way towards repairing confidence in the euro," Rhona O'Connell of GFMS Analytics said.
But not everybody bought into a bearish dollar scenario. "As the dollar continues to rise, I expect the gold market to continue lower," Leonard Kaplan, president of Prospector Asset Management, said.
Broader investor interest in gold was expected to help boost prices, with exchange-traded funds (EFTs) offering big and small investors easy access to the market. Geo-political risk still figured, highlighted by recent bomb attacks in London.
Silver, which is also partly an industrial metal, surprised analysts with a strong speculative-driven rally earlier this year. It was expected to firm 11.3 percent from 2004's $6.29 to an average of $7.00 in 2005, before coming off slightly to $6.88 in 2006. Spot silver was just below $7.00 on Monday.
PLATINUM, PALLADIUM: The global platinum market was seen moving towards balance in 2005 after six years of supply deficit, but worries over demand, which held back prices early this year, were subsiding.
The metal, used in jewellery and to clean auto exhaust emissions, was forecast to average $860 in 2005, up a modest 1.5 percent on the 2004 bid price average of $847.23 and up sharply from January's poll average of $796.
Prices were seen easing to $800 in 2006. Spot platinum was at $864 on Monday.
"Continued growth in demand for natural resources from China is likely to support the white metals...with a possible deficit in industrial consumption being more than compensated for by an increase in speculative buying," Ross Norman of TheBullionDesk.com said.
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