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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (37524)	5/22/2009 8:01:51 PM
From: LoneClone	Read Replies (1) \| Respond to of 194794

Gold seen dropping to $850/oz - Fortis Ines Schumacher \| Fri, 22 May 2009 13:19 miningmx.com [miningmx.com] -- FORTIS Bank sees the short-term gold price dropping to as low as $860 per ounce on the back of a stronger dollar and negative sentiment towards future price drivers. “Inflation seems a long way away and so we see prices drifting lower,” the Fortis Bank metals monthly report for May 2009 said. Fortis noted China’s announcement on 24 April that it had increased its gold reserves by 454 tonnes (t) to 1,054t. “The announcement…has rekindled gold market hopes that China is to become a large purchaser of bullion,” Fortis said. The market expectation is that China will buy significantly more gold to bolster its current gold reserves value from 2% to the ideal level of 10%. Fortis raised concerns that this level is unrealistic. “The only consistency in central bank policy appears to be inconsistency. In practice, very few countries have a share that is near the world average; most have either a lot lower or a lot higher,” the report said. China would have to acquire nearly seven times more gold than it has at present to match the 10% benchmark – about 7,500t. Gold was trading at about $930/oz by 18 May, which was its highest price since the start of April when it reached a low of $870.50/oz. A weakening of the dollar caused the gold price to strengthen, which Fortis does not see as a driver in the coming months. “A weaker dollar has seen gold make solid gains, but we wouldn’t bank on the US currency falling much further,” Fortis said. The report noted the absence of gold exchange-traded fund (ETF) inflows. There was a withdrawal of 1.4t from the 16 ETFs Fortis monitors. However, they “perked up” again in mid-May. Fortis sees the gold price hovering between $860 and $930/oz in one month, then dropping to $850/oz in the next few months before climbing back up to $1,200/oz in 12 months’ time.