GOLD
=DJ S Africa Gold Stocks To Fall Unless Gold Breaks $270/oz
27 Feb 05:14
By Angus Macmillan
Of DOW JONES NEWSWIRES
JOHANNESBURG (Dow Jones)--Sharply-rallying gold shares are likely to pull
back equally swiftly unless bullion breaks through $270 an ounce soon, gold
analysts said Tuesday.
Leading South African gold shares have spiked nearly 20% since the middle of
last week on bullion's $10 bounce from around $257/oz to 267/oz.
And the Gold Index on the JSE Securities Exchange South Africa has broken
through the psychologically important 1000 point barrier for the first time
since in several months.
Nick Goodwin, gold analyst at Fedsure Asset Management, sees the metal
heading through $300/oz over the next few months, but not before significant
volatility.
"There is enormous pressure to keep the gold price down as central banks and
other lenders of physical gold don't know where their metal is," he said.
"Too many traders have shorted bullion and now don't have metal to pay back
to lenders," said Goodwin.
But a pullback in the gold stock rally may be imminent as leading gold shares
such as AngloGold Ltd. (AU), the world's biggest producer, are already
discounting a $270/oz bullion price.
AngloGold surged 5% Friday, 8% Monday and a further 5% in early Tuesday trade
to 260 rand ($1=ZAR7.7340).
Gold Fields Ltd. (O.GFD) and Harmony Ltd. (O.HRM), South Africa's other big
producers, have also surged over the past three days.
"Gold stocks usually move up ahead of a gold price move, but they invariably
pull back if bullion's rise is muted," said Goodwin.
Another analyst at a local securities house, who requested anonymity, said
gold stocks are rising on more than a short-covering rally.
He said there has to be a stronger foundation for central banks to have
increased their gold leasing rates to 2% for 0.75% in the past few days.
"A lot of things are coming together at the same time in the gold market.
Something major is happening," he said.
Rumors that the Bank of England has stopped lending gold have also assisted
the rally in gold stocks.
David Davis, gold analyst at Standard Equities Ltd. said the increase in
lease rates, a 200 metric ton international short position and rumors of a
second Washington Agreement to limit central banks gold sales is pushing up
bullion and gold stocks.
"If bullion gets through $270, it can head to $330 or higher and gold stocks
will move sharply upwards," he said.
"But we may see some profit-taking in the short-term," said Davis.
By Angus Macmillan, Dow Jones Newswires; +27-11-72607903; Mobile
+27-82-2107-307;
(END) DOW JONES NEWS 02-27-01
05:14 AM |
