The Hindu Business Line : Gold prices may average at current levels this year

Outlook
Yellow metal could range between $590 and $690 an oz.
Any disturbance in demand-supply fundamentals can result in silver prices zooming.

Mumbai March 22 Gold prices in the global market this year are likely to average around the current levels.

Gold is currently trading at $663.50/664.50 an ounce and silver at $13.38/41 an ounce. These may well be the average for 2007, according to Mr Jeffery Christian, Managing Director of CPM Group, a New York-based organisation with focus on commodity research and consulting, asset management and investment banking.

Gold prices for the remainder of the year would range between the low of $590/oz and the high of $690, while silver would trade in a wider range between $10 and $20/oz, Mr Christian said at the launch of The CPM Gold Yearbook 2007 here.

The gold market bears a risk premium arising out of economic, financial and political uncertainty. The yellow metal is known as safe haven investment in times of uncertainty. "The risk premium in the gold market is to stay," he said.Silver is more volatile owing to demand from the fabrication industry and jewellery sector. Thus, any disturbance in demand-supply fundamentals would move silver prices to a higher orbit, say even $20/oz, according to Mr Christian. Last year, gold averaged $606/oz, close to the 1980 average (second highest) of $612, and much higher than the following highest average of $459/oz in 1981.

Silver averaged at $13.65/oz last year.

Globally, gold fabrication increased by 8 per cent from 73. 6 million ounces (2005) to 79.6 million ounces (2006). On the other hand, global physical demand of gold including investment in Exchange Traded Funds declined 8 per cent from 43.5 million ounces (2005) to 39.7 million ounces (2006).

Seen firm

Gold markets are expected to remain firm until next week when the most active April contract on the NYMEX witnesses a rollover on expiry after which there could be a possible break in the northward journey, Mr Christian said.

In the domestic spot market, standard gold was quoted at Rs 9,430 per 10 gm while silver was quoted at Rs 19,535 a kg.