LONDON (Commodity Online): It seems there is no end to gold’s race to the higher levels. This is the tenth year for gold continues its gains. At present gold is parked at $1246 an ounce.

However, market analysts are not certain about the future of gold’s bull run. The interplay between the three key factors that determine the gold price — its role as either a currency, commodity or store of value — is all too complex to make it any other way.

Do you want to trade in hot commodities and currencies? Open a Live Account now!

But if the gold producers are any judge, the gold price is not about to retreat in a hurry. They have been buying each other up like there is no tomorrow, with Newcrest’s gobbling up of Lihir, and the two-way tussle between Canadian gold producers for ASX-listed Argentinian gold developer Andean Resources, reflecting the industry’s confidence in the price of the yellow stuff.

Most of the experts said they see more upside for gold prices as the key drivers of a safe-haven and currency-hedge demand are joined by the emergence of strong investment and fabricating demand from China and India. They say gold could reach $1350 an ounce by early 2012 and stay there for 12 months before investment and safe-haven demand eases.

The upside surprise could come from central bank buying also. The bulk of emerging economies are overweight US dollars and underweight gold. Like just about everything else in the world of commodities, China looms large.

China is a good example, it could consume the global annual supply of gold mine production and still only hold 5 per cent of gold to total foreign reserves.

There is also a bit of a buzz surrounding Prosperity Resources on the strength of the big-time potential of its gold-copper exploration efforts in Aceh, Indonesia.

In a sure sign that Prosperity is on to something, some of the big major mining groups have been sniffing around. Prosperity has covered what could be a totally new copper/gold province, with six mineralised copper/gold porphyry intrusives now identified in an under-explored, 60 kilometre structural belt just inland from the coast.

Multiple engines have been driving gold’s run to the upper right-hand corner of the chart. For one, investors have turned to gold as a safe-haven investment in response to an uncertain economic environment. There’s been a steady stream of downbeat data sparking worry about a US economy losing momentum, from free-falling existing home sales to volatile initial jobless claims.

Analysts at CIBC World Markets in Toronto, who see $1,400 gold next year, remind us that during the Great Recession, gold was one of the only investment classes that provided positive returns. This fact will not be forgotten if the next recession materializes.

This is the time of year when gold jewelers typically do their biggest business. September, in particular, has been the best month of the year for gold and gold stocks.

In a typical year, the September price rises 2.5% above the August price. And to make the case even more compelling, the gold price has risen in 17 of the 21 Septembers since 1989, by far the best success ratio of any month of the year.
(SOURCE: Sydney Morning Herald)

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook