Gold prices expected to rise
Garry Marr -- Financial Post, with files from news services
Gold prices are expected to edge higher in the coming days with small cap companies likely to be the big the winners in any uptick.
"The larger companies like Barrick Gold Corp. and Placer Dome Inc. don't have the same margins as a Kinross Gold. Corp," said Daniel Brebner, London-based analyst with UBS Warburg.
Mr. Brebner said the larger cap companies have much lower costs and don't need as large an increase in price to make their operations profitable.
Trading in New York yesterday, Barrick was down 39¢ at US$16.86, while Placer Dome fell 30¢ to US$12.69. Gold closed at US$292.40, up $1.
Gold prices continued to edge upward in response to world events but most analysts were predicting they would top out near US$300 an ounce.
"That's we are looking at, near-term," Mr. Brebner said. "Given the political and economic situation you might have expected a larger rise."
But he said there is some question has to whether central bank selling has kept prices for the metal low. At the same time, jewellery demand remains weak. Then there's the ultimate question of whether gold is starting to lose its reputation as a place to park money in times of turmoil.
Judging by the rise in price of gold, it still has its followers. Before the Sept. 11 attacks on the World Trade Center, gold was trading at US$271 an ounce.
What happens in Afghanistan in the coming days is expected to be a key barometer of where prices go.
"Everything will be related to the action on the ground and gold prices will remain fragile," said Frederic Panizzutti, an analyst at Geneva-based Golden Avenue.
"The market is going to run into an action-and-reaction mood, which probably will be positive for gold ... no one would like to be caught short on gold."
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