The gold bull trend experienced last year is expected to remain intact throughout 2006, with the metal forecast to average $544 a troy ounce and to trade in a range between $490/oz and $620/oz in 2006, Switzerland-based MKS Finance senior vice-president Frederic Panizzutti said on Friday.
In the first quarter of 2006, gold was forecast to average $535/oz, $540/oz in the second quarter, $540/oz in the third quarter and $560/oz in the final quarter.
At 10am on Friday, gold was quoted at $546/oz, down $0,40 from the previous close.
“The factors that fed the upside momentum over the last few months are unchanged and should continue to be supportive for gold,” Panizzutti wrote.
Supportive factors for gold in 2006 are possible terrorist threats, geo-political tensions, high oil prices and the Avian H5N1 bird-flu virus, which are all factors contributing to the general feeling of global insecurity, he added.
“Gold is more and more becoming an insurance policy against any type of disruptive risk and most portfolio managers believe that gold is an asset which should not be missed in their portfolios,” Panizzutti wrote.
Talk of possible increases in gold reserves held by central banks should further support the price of gold, he added.
“We expect gold to remain very volatile, trading erratically from time to time and to break over $600/oz during the course of 2006. We would not exclude several short-lived double-digit rallies to surprise the market during the same period,” Panizzutti wrote. — I-Net Bridge