Gold may test $450 in 2004

Precious-metals consultancy GFMS has forecast that the United States dollar gold price could recover from its current levels of just less than $400 a troy ounce to test $450/oz on global political and economic uncertainties in 2004, GFMS said in a statement on Thursday.

At 13.45pm, gold was quoted at a monthly low of $396,15/oz, down $4,73/oz from Wednesday’s New York close of $400,88/oz.

The consultancy believes the main driver of gold investment demand over the next year or so will be the economic developments in the US.

“The US fiscal and current account deficits, on top of eye-watering levels of consumer debt, create huge risks of another hefty slide in the US dollar, plus eventual recession and a slump in equity markets. Throw in instability in Iraq and you’ve got pretty good conditions for a further surge in [gold] investment.

“And don’t forget that the financial inflows into gold last year — which we estimate at a little over $10-billion, on a net basis — were still tiny compared to the potential sums available,” GFMS chairperson Philip Klapwijk said.


GFMS believes that the inflow of investor money in 2003 was the key driver of last year’s dramatic price rally in the US dollar gold price.

In early April, the gold price touched a 15-and-a-half-year high of $432,10/oz.

The report also sees dehedging by producers as having played an important role in supporting the gold price in 2003.

“We have seen dehedging drop by not far off a third, but that still left it at over 300 tons, its second-highest [to date]. Also timing was critical — prices in the second quarter last year were being hit hard by investors bailing out as the Iraq war premium imploded, yet that’s precisely when we saw some of the heaviest dehedging,” Klapwijk said.

Furthermore, GFMS have forecast that dehedging should rise in 2004 to somewhere between 340 and 400 tons. — I-Net Bridge

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

It’s just not cricket

Near Makhanda in the Eastern Cape in the village of Salem is a cricket pitch that is said to be the oldest in the country. Watered by blood and trauma, rolled with frontier nostalgia and contemporary paranoia, how does it play?

Three million jobs lost and hunger surging amid Covid-19 crisis...

Income shocks and the breakdowns in social protection schemes have had consequences for hunger and food insecurity in South Africa

SAA creditors give go-ahead on rescue plan

Unions and staff representatives have agreed to severance packages for about 2 700 employees who will lose their jobs.
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday