16 April 2004 19:05
Gold tumbles this week but new report tips a further rise
PERTH, April 16 AAP - Gold dived below $US400 an ounce this week but a new gold report tips an upbeat outlook for the
metal and Australian gold stocks. Hartleys' Gold Book for 2004 says gold's upward trend, since February 2001,
is set to continue. "Upward movements in the gold market over the last two years have been mainly due to continued
weakening of the US dollar," the Gold Book says. This was primarily driven by a large United States current account
deficit and a perception the US economic recovery is flimsy. Hartleys believes the long term bottom of the US dollar is
not going to occur until the US addresses its massive deficit, now 3.5 times larger than GDP (gross domestic product).
"Therefore, the trend for the gold price will remain up; however dips are to be expected during 2004 due to amongst
other things, issues relating to the US elections (economic policy statements and spending promises by both
parties)." Gold has enjoyed a big run over the past six months, reaching a high of $US430 per ounce at one stage
but dived to a low of $US395.25 this week in one of its periodic retreats. The price of gold in Sydney closed 35.0 US
cents lower at $US400.625 per ounce today. UBS analyst Shaun Giacomo is upbeat about gold's outlook, certain the
massive US deficit will continue to hurt the US dollar and boost the gold price which continues to demonstrate its
inverse relationship to the greenback. But Daiwa Securities analyst Mark Pervan is concerned gold prices could have
almost reached their ceiling with recent signs the US economy is picking up. Hartleys said other drivers of a high
bullion price will include demand from China, India and Russia and the flight to gold as a safe haven investment because
of threats of global terrorism. It said the high gold price was good for the Australian gold sector. "The near to
medium term outlook for Australian gold explorers and producers is excellent," said the Gold Book, which is
published on Monday. AAP lk/eb
[AAP News] |
RUSSIA IN FACTS
