BS: Gold could break past $1600/oz by end of year, say analysts
THE gold price could soar to a record high of $1600 an ounce this year because of possible sovereign debt defaults and low interest rates, metals research consultancy GFMS has said.
JPMorgan Asset Management fund manager Ian Henderson recently said he would be "quite surprised" not to see gold trading above $1600/oz this year.
Gold posted its 10th successive annual gain last year — the longest winning streak in 90 years. SA’s producers realised an average R287400/kg as a strong rand against the dollar offset dollar gains in the gold price.
Whether SA’s producers will reap much benefit from further increases in the metal’s price depends entirely on what the rand does against the dollar this year, analysts said.
The gold price tends to strengthen as the dollar weakens against the euro. The rand tends to be countercyclical to the dollar gold price. Local gold producers pay costs in rand and generate dollar revenue, making the exchange rate a critical factor.
GFMS said in its 2010 Gold Survey that investment demand had played a "critical role" in pushing gold to new peaks last year, with a 26% increase in the annual average price compared to the previous year. It expects the price to break through the $1500/oz level about the middle of this year and warned that gold bulls could be disappointed in the early months of the year.
Gold, which was trading at $1 381 late yesterday, could push through $1 600 by the end of this year or early next year, GFMS said. With Bloomberg
