[nasional_list] [ppiindia] Gold price hits $500, highest since 1980s
- From: "Ambon" <sea@xxxxxxxxxx>
- To: <"Undisclosed-Recipient:;"@freelists.org>
- Date: Tue, 29 Nov 2005 23:30:54 +0100
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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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