>>DJN =DJ INTERVIEW:Gold To Test $400 Regardless Of Iraqi Outcome
By Jim Hawe
Of DOW JONES NEWSWIRES
TOKYO (Dow Jones)--The incessant drumbeat of war has helped to drum up
tremendous interest in gold, sending this traditional safe haven asset above
$367 a troy ounce Thursday in New York, a level not seen since late 1996, but
gold still has room for gains, an industry analyst said Friday.
Market fundamentals are now in place to carry gold over $400/oz later this
year, even if U.S. soldiers never set foot in Iraq, says Akio Shibata, chief
economist with Japan's Marubeni Research Institute,
According to Shibata, gold's improving supply and demand situation over the
past three years is a more compelling reason to invest in gold than the
current "war premium".
"An eventual outbreak of a war with Iraq could very well serve as the
catalyst that pushes gold over $400, but the market fundamentals have improved
so much over the past few years that a test of this level was already well in
the works," said Shibata.
For 2003, Shibata expects gold will easily clear the $400 mark before it
meets with any significant profit-taking. Even if there is a significant pull
back in gold later this year, Shibata expects a solid floor around $320.
"If I had to pick a trading range for 2003, I would have to say $320 to
somewhere just over $400," said Shibata.
Spot gold was quoted at $363.10 midday Friday in Hong Kong, down from
$364.65 late Thursday in New York.
Interest In Gold Returned In '99;EU Bks Agreed To Limit Sales
Shibata noted that investor sentiment toward gold started improving in
September 1999 when 15 European central banks signed the Washington Agreement,
pledging to limit their collective annual gold sales to 400 metric tons for
five years.
"At that time, gold was trading around $250/oz, which many saw as the lowest
possible level for the metal. The Washington Agreement flushed out a lot of
bargain hunters and prices have been steadily moving higher ever since."
With the gold price recovering from late 1999, many mining companies began
rethinking their hedging practices, Shibata said, which in turn helped to
tighten supply.
"The 'Big Three' mining companies - Newmont Mining Corp. (NEM), Anglogold
Ltd. (AU) and Barrick Gold Corp. (ABX) - started buying back gold to close out
some of their short positions," explained Shibata.
Last week, London-based commodity research firm Gold Fields Mineral Services
reported that the global hedgebook in 2002 contracted by a "substantial" 352
tons.
"The motivation behind the large fall in global hedge positions was the
strong and sustained increase in spot prices and more importantly,
expectations that they will continue to rally," said Philip Klapwijk, Managing
Director of Gold Fields Mineral Services in London.
-By Jim Hawe, Dow Jones Newswires; 813-5255-2950; jim.hawedowjones.com<< |
