Business Daily from THE HINDU group of publications
Monday, Jul 10, 2006
Business Daily from THE HINDU group of publications Monday, Jul 10, 2006 |
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Gold & Silver Agri-Biz & Commodities - Outlook Optimism over rise in gold, palladium prices G. Chandrashekhar
Mumbai , July 9 After plunging since mid-May, gold prices have recently recovered at least by half. Last week ended with the yellow metal trading above $630 an ounce. Many investors took profits after the price hit intra-day high of $637/oz on Friday.
New long positions
The latest Comex figures show that in the past week, investors added new longs to their positions, with net speculative longs standing at 286 tonnes from 266 tonnes previously. The metals market is likely to get a boost from the latest US economic data which was reassuringly weaker. The US payroll data showed only 1,21,000 new jobs created in June, lower than consensus. This is expected to weaken the dollar and thereby, prove positive for gold. There are other factors helping gold. Broad-based strength in commodity complex, a firmer euro following the ECB meeting (which injected into the market the prospect of a rate increase in August and ongoing geopolitical uncertainty (Iran nuclear stand-off, North Korean missile tests) have combined to support the metal.
Expectations
The half-yearly Reuters precious metals price poll of 31 analysts released last week showed that due to the strong price gains made across the sector early this year, the mean 2006 and 2007 forecasts for gold, platinum and palladium have on an average been revised upwards by 18 per cent and 20 per cent since the previous poll in January. Simply looking at the mean forecasts, expectations are for gold and palladium to continue to rise next year, but for platinum to fall. However, analysts have become divided. This conclusion does not take into account the observation that there is now arguably much more uncertainty than before amongst market participants about the 2007 gold and platinum outlook, commented an analyst. The range between the highest and the lowest price for gold is almost 100 per cent.
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