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Gold likely to soar on supply
shortfall
Dubai—The price of gold, which breached $1,000 per ounce mark for
the first time last month, is poised to remain high for the rest of
the year as the yellow metal continues to face supply constraints
and increased investment demand, analysts said. The prime factors
that will continue drive gold prices is the supply and demand
fundamentals and oil price-driven inflation. “With no significant
increase in mine supply, and a perceptible shortfall in gold selling
by central banks combined with no growth in scrap gold supply,
demand will continue to outstrip supply despite soaring prices,”
analysts said.
James Burton, Chief Executive Officer, World Gold Council (WGC),
told Khaleej Times that world gold supply growth, which is expected
to be almost flat, cannot cope with the rapidly increasing
investment demand. “Growth in mine production in 2008 would be
almost flat, increasing slightly by two per cent this year. “There
are no major discoveries. We cannot expect the central banks which
have agreed to an annual offloading of 500 tonnes of gold per year
to keep their commitment due to the high volatility in prices,” he
said. “On top of that, there has been no exceptional increase in
scrap gold supply in the first two months of this year, which last
year reached 900 tonnes,” Burton pointed out.
Gold surged from a low of $601.90 in January 2007 to a high of $1009
recently. Industry experts predict gold prices would push past
$1,100 an ounce in the coming months as dollar continues to plunge
while oil prices surge. They expect another record level of gold
investment in 2008, driven by ongoing problems in the US, high oil
price and instabilities in currencies. As the impact of the US
credit market crisis is being felt stronger than expected,
Dubai-based yellow metal analysts are predicting a high of $1129, a
low of $795, a year end price of $1046 and an average price for the
year of $935. Some suggest that gold may hit a high of $1,180 an
ounce and dipping as low as $870 an ounce, but averaging at
$970.—Agencies
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