[nasional_list] [ppiindia] Gold price hits $500, highest since 1980s

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** Beasiswa dalam negeri dan luar negeri S1 S2 S3 dan post-doctoral 
scholarship, kunjungi 
http://informasi-beasiswa.blogspot.com **      Gold price hits $500, highest 
since 1980s  
      By Donald Greenlees International Herald Tribune

      TUESDAY, NOVEMBER 29, 2005
     


     

      HONG KONG Gold prices broke the $500 barrier and hit their highest level 
in almost two decades in trading in Asia on Tuesday, the start of what some 
analysts said could be a long-term growth trend. 

      Gold peaked at $502.70 an ounce in Asia before falling to $497.55 in the 
early evening. But with strong buying by global funds, analysts said that the 
price would test the level hit in 1983, when gold reached $509.80, before the 
end of the year. Since early November, gold prices have leaped about 10 
percent. 

      The main drivers of the recent surge have been hedge funds and 
speculators concerned over rising inflation, slower economic growth and 
uncertainty about the strength of the dollar, commodities analysts said 
Tuesday. They said investors were also betting that central banks, particularly 
in Asia, would increase historically low levels of gold reserves. 

      Ross Norman, a director of TheBullionDesk.com, based in London, predicted 
that "a cocktail of different factors" would sustain long-term growth in gold 
prices, including "expectations for inflation, demand from Asian countries and 
a possible rethink from certain key central banks." 

      "Our thinking is that a figure between $580 and $600 next year is 
possible," he said. "We remain very bullish for gold." 

      Aside from its attraction as a safe haven for investors, long-term 
confidence in gold is being fueled by demand among small retail buyers of gold 
in India, China and the Middle East. 

      Representatives of the World Gold Council, which is funded by gold 
producers, forecast the consumption of gold in India to reach as high as 650 
tons in 2005, up from 514 tons last year. Consumption in China is expected to 
be 250 tons this year, compared with 224 tons last year. Jewelers purchased a 
record $38 billion of gold in the year through June 30, according to the 
council. 

      Albert Cheng, the Far East managing director of the council, based in 
Singapore, expressed confidence that "the buying will not stop" in the main 
consumer markets, despite higher gold prices. 

      "The increasing wealth in this region is reflected in the increase in 
demand, I would say, in the last two years," he said. "Jewelry demand has been 
very, very strong." 

      But Michael Lewis, global head of commodities research for Deutsche Bank 
in London, warned that seasonal factors are likely to produce a dip in the gold 
price in early 2006, before it resumes an upward climb. Deutsche Bank is 
predicting that the price of gold could drop to $505 to $510 an ounce before 
the end of the year. It could then drop as low as $470 an ounce in January. 

      "Although there is quite a lot of euphoria at the moment, there is 
certainly some risk that the latest move might actually unravel a bit," he said 
by telephone. "I would say this latest move may not be sustainable just in the 
very short term and that January is a month which is traditionally been very 
problematic for gold." 

      But Lewis added that the bank was "still medium-term bullish on gold" and 
predicted that gold would hit $530 an ounce in 2006. 

      Lewis said the fund community had taken out "record long" positions on 
gold. According to data tracking gold contracts, the number of long positions, 
or bets that prices would rise, outnumbered short contracts by 162,982 on the 
Comex division of the New York Mercantile Exchange, according to Bloomberg 
News. 

      There are also signs that some central banks want to reduce exposure to 
the dollar by buying gold. According to the World Gold Council, the level of 
official gold reserves in Asia is dramatically below typical gold reserves in 
Europe. Gold accounts for 1.1 percent of China's reserves and 1.3 percent of 
Japan's reserves. 

      In some European countries, like France, Germany and Italy, gold accounts 
for up to 50 percent of reserves. Russia has signaled its intention to double 
the proportion of its reserves held in gold from about 5 percent to 10 percent. 

      Norman, of TheBullionDesk.com, said expectations that some central banks 
would increase gold reserves came as global mining supply has peaked and shows 
"very little sign of recovering." He said that many leading producers were 
suffering from declining ore grades and that political intervention was making 
it harder and more costly to open new mines. 

      Despite slowing supply and strong demand, Norman cautioned it was getting 
harder to predict the direction of the gold price. In the past, he said, 
predicting gold prices required a "a fairly simple model based on supply and 
demand balances." But, he added, "we are moving out of that now and into the 
realms of the madness of crowds." 

     


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