Thursday, December 27, 2007

Gold Price Predicted to Hit $US1000

THE price of gold is set to remain high in 2008, putting it on track to break $US1,000 an ounce for the first time, as the yellow metal continues to offer investors a safe haven from volatile financial markets and supply remains tight.

Mark Cutifani, The CEO of one of the worlds largest gold producers, AngloGold Ashanti, has expressed confidence about the strength of the world gold price.

"You can take gold anywhere in the world and there will be a buyer, which can't be said for many other commodities," he said in an interview.

Markets are tipping gold to rise to a 28 year high of $850 in the first quarter of 2008 and then hitting $1000 by December.

In 2007 gold climbed from a low of $243.50 range from a low of $601.9 to a high of $845.40 in November.

Mr Cutifani is predicting gold to remain above $US800 in 2008 with heightened demand. "Not taking into account factors such as the high oil price and instabilities in currencies".

He added, "Whether the macroeconomic environment will exert greater pressure on gold will be seen."

He also stated, in December that AngloGold Ashanti would close its hedge book. "We'll make a strategy statement in February about our long term approach."

Senior resources analyst Gavin Wendt from Fat Prophets agrees that gold supply will remain tight, with mine closures and fewer new discoveries, and as the cost of mining gold becomes more expensive. He believes its only a matter of time before the gold price moves up to $US1,000 mark.

"All of the factors that have been at work over the past few years, pushing the gold price higher, are very much still in play," Mr Wendt said. "We're going to see further weakness in the US dollar, which has to be positive for gold. We'll see the continuation of strong oil prices and that inflationary effect will be positive for gold."

In August, the vice chairman of one of the world's biggest gold miners - Newmont Mining Corp's Pierre Lassonde, told a gold conference in Western Australia that the price of gold would break $US1,000 within the medium term. The farsighted predictions of Mr Lassonde, a well-known gold bull, have been well founded even if his time frames are somewhat shortened. He correctly forecast gold to rise to the $US750 level, which it did in October 2007.

Mr Lassonde expects gold to be trading over the magic $US850 early in 2008, emphasized no doubt by the very real possibility of a US economic recession.

Argonaut Securities is also expecting the gold price to strengthen in 2008 and The World Gold Council states that gold offers good protection against exchange rate fluctuations, particularly the US dollar. The World Gold Council's Mr Graydon commented that the worsening of geopolitical tensions could also add to the case for a higher gold price.

Confidence that the gold price will rise has also led many of the world's largest gold companies to close down their hedge books in order to get exposure to spot market prices.

The investment bank Société Générale has recently collated figures to show that the global gold hedge book is now at its lowest level since 1992.

Companies that have closed or reduced their risk include some of the top world gold producers such as Canada's Barrick Gold Corporation and Newmont, Beaconsfield Gold NL, View Resources, Lihir Gold, Red Back Mining and Australia's largest miner, Newcrest Mining.

It looks like the gold price prediction to hit or even surpass the magic 1000 dollars an ounce is really on the cards.

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