Consumer interest in gold said needed to boost price
By Scott Anderson
TORONTO, Jan 12 (Reuters) - The classic economic theory of supply and demand is
what is needed to boost the battered gold price to more acceptable levels, industry
consultants Gold Fields Mineral Services said on Wednesday.
``What's going to improve the price of gold is the fundamentals starting to move gold,'
said Philip Klapwijk, managing director at Gold Fields, following the release of the
company's gold survey.
``If there is a bigger shortfall between fabrication demand on the one hand and mine production on the other, at some point the
price has to rise to effectively cut off the greater fabrication bias in the market. It's down to supply and demand,' he said.
Gold has traded in a volatile fashion throughout the year, dropping to a 20-year low in the August of $251.70 an ounce amid
concern about British bullion sales, before recovering to a two-year high in early October. In London on Wednesday it was
trading at $282.25 an ounce.
Gold Fields estimated in an update to its international Gold Survey 1999 released globally on Wednesday that the gold price was
expected to average around $280.00 an ounce in the first half of 2000, while trading in a range of $265.00 to $305.00.
``Stronger jewelry demand and less producer hedging should mitigate the price impact of central bank sales and speculative
short selling in the first half of 2000,' the report said.
Although supply and demand will be the key underlying factor in determining the price, Klapwijk said renewed investor interest
in gold is needed to spur the flagging metal -- something he does not see happening soon as investors look elsewhere.
``For a real bull market in gold to be restored, you need investor interest in buying gold and we have not seen that,' he said.
``Price performance has been poor. Gold is unfashionable. It's done badly and investors are looking elsewhere.'
Klapwijk said gold, once the haven of investors in times of uncertainty, has been replaced by U.S. dollars as the popular safe
choice among investors. |
