| GFMS says prices to zoom after a correction in the first half of the year.
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| Gold is likely to hit $1,000 an ounce later this year thanks to a combination of continued investor appetite, a weak dollar and record oil prices, the US sub-prime crisis and geopolitical tensions, according to the latest estimate by GFMS, the leading precious metals consultancy.
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| Early on Thursday, the metal was quoted at $880 an ounce after hitting the all-time high of $914.1 last week.
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| The consultancy forecast that the metal will average $840 over the first half, with prices set to rise further later in the year.
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| The estimates are significant as GFMS CEO Paul Walker, early in the second half of last year, had predicted that gold would hit the $900-mark.
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| Announcing the estimates, Philip Klapwijk, executive chairman, GFMS, said,”At the moment, investor appetite for gold seems undimmed. This should propel gold prices for the rest the year. Predicting the top is never easy but we always thought the $900 barrier would be breached easily. We have to start viewing $1,000 as a clear possibility later this year.”
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| However, the report does caution that a short to medium-term correction is possible, chiefly as a result of the speed with which prices have risen and the huge fund overhang on Comex.
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| “The correction explains why our forecast of an average $840 for the first half seems a bit low in light of the current levels. But that’s still up almost 30 per cent y-o-y. We should see the rally to $1,000 an ounce when the period of consolidation is out the way and the funds are in a position to buy again,” Klapwijk said.
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| Volatility at record levels may cause a slump in fabrication demand by almost a fifth in the first half. The slump could persist in the second half as well if prices continue to escalate.
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| The total investment demand for gold in the first half of 2007 was 200 tonnes. In the second half, it was 300 tonnes. It was a total of 422 tonnes in the whole of 2006. In the first half of 2008, the demand is expected to be 400 tonnes, says the report, riding on the metal’s hedging properties |
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