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

To: LoneClone who wrote (38087)	6/3/2009 7:49:12 PM
From: LoneClone	Read Replies (1) \| Respond to of 193021

Move past $1 000/oz will be 'challenging' for gold in next 6 months - RCR miningweekly.com By: Liezel Hill 2nd June 2009 TORONTO (miningweekly.com) – Even with the help of a weakening US currency, the gold price will find it “challenging” to break through the psychological $1 000/oz mark in the next six months, unless strong bearish sentiment returns to equity markets, Australian equity researcher Resource Capital Research (RCR) said in a report this week. In its latest quarterly report on junior and midtier gold companies, RCR predicts gold will trade in the range of $900/oz to $1,000/oz during the next six months, but adds that it sees slightly more risk on the downside if equity markets continue to rally. The current gold price of around $980/oz is a three-month high, up 4% from $942 at the end of February. “However, during that three-month period the price has by no means been flat, spending most of April below $900, and reaching a low of $869/oz on April 17,” RCR points out. Looking ahead, the high level of volatility is expected to continue, as gold finds itself caught in the midst of a 'battle' between US dollar weakness and equity market recovery. “The gold price is currently being driven by two opposing factors,” commented RCR senior gold analyst Tony Parry. “Equity market recovery, which reduces the perceived need for ‘safe-haven’ buying of gold, tends to push it down, while US dollar weakness increases ‘store-of-value’ demand for gold, and tends to drive it up.” Strong equity market recovery in March pushed gold back below $900/oz, while a diving US dollar since early April - and more subdued equity markets - helped the gold price surge back up towards the $1 000/oz mark, he said. Which of these two opposing forces will prove strongest? “In the next six months, we see gold tacking in a band between $900 and $1 000, with probably a greater risk that further equity market recovery could push it below $900, relative to dollar weakness which could push it over $1 000,” said Parry. Beyond that time period, the re-emergence of inflation is the “monster under the bed” which could crawl out and become the dominant driving force in gold markets, and which could see the price above US$1 000/oz in 2010, he continued. Surging safe-haven investment buying channelled through gold exchange-traded funds has dominated gold markets in recent months, while, on the supply side, recycled gold scrap flooded onto the market. Although jewellery and industrial demand slumped, ETFs stepped in and took up the slack with record fund inflows, RCR comments. “For the first time, ETF demand exceeded jewellery and industrial demand, the traditional stalwarts of demand.” As far as gold equities are concerned, in the last six months gold share indices have recovered much of their 2008 falls and have strongly outperformed overall equity markets. “Money is flowing even into the junior end of gold share markets, with many exploration and development gold companies undertaking equity raisings.” In the past six months, the Australian gold index is up 38%, Canadian up 26% and South African up 29%. The South African and Canadian indices are now slightly above the levels 12 months ago (pre global financial crisis), while the Australian index is 13% below its 12 month levels. In comparison, the Morgan Stanley World Index is still 37% below its May 2008 level.