Schroders analyst says gold price could hit $2,000/oz if dollar falls
By Tom Stundza -- Purchasing, 3/11/2009 1:37:00 PM
Gold prices will be inflated and erratic because of economic fears, various government stimulus programs and the flight of investments into precious metals as a safe haven, according to mining executives and fund managers at conferences this week.
Through Tuesday, gold is averaging $903/troy ounce in world markets, up from $872 in 2008. Producers, speaking at separate Reuters conferences, say prices for the precious metal could remain volatile in the near term because the outlook of the global economy remains uncertain.
Aaron Regent, the chief executive of Barrick Gold in Toronto, the world's largest gold producer, tells the Reuters Global Mining and Steel Summit in New York that the price of gold will remain volatile in the near term--and will rise because of strong investment demand and increased jewelry buying. At a Reuters Global Mining and Steel Summit in Johannesburg, Nick Holland, CEO of the world's fourth largest gold producer, Gold Fields of South Africa, thinks the daily price of gold will surpass the 11-month high of $1,000 an ounce in futures trading on February 20, 2009, as reported on Purchasing.com
There already have been reports from other conferences that $1,000-plus gold prices soon will be commonplace. At the latest meetings, fund managers also expect gold to be high but remain choppy and trade in a wide range in 2009.
Thomas Winmill, portfolio manager of New York-based Midas Fund MIDSX.O, expects the price of gold to trade in a wide range from the high $700s to more than $1,000 an ounce for the rest of this year. Frank Holmes, CEO of U.S. Global Investors in San Antonio, believes the U.S. market stimulus plan supports his long-term bullish outlook for gold bullion. Winmill said there could be a rush to a much higher gold price should there be simmering geopolitical tension or other catastrophic events.
Gold may even reach $2,000/oz in the next year if the dollar falls, says commodities product manager Christopher Wyke at the Schroders investment fund. While Wyke has backed off from his stance last June that gold could reach $5,000/oz over the next few years as a refuge from inflation, the London-based Wyke says in an interview with Reuters he still expects the precious metal to show stronger gains in the second half of 2009 if the dollar falls and inflation fears mount.
