Gold may rise on central-bank buying speculation
Monday, 9 November 2009
LONDON, Nov 8 (Bloomberg): Gold may advance to a record on speculation that central banks and investors will purchase the metal to hedge against a declining dollar, a survey showed.
Seventeen of 23 traders, investors and analysts surveyed by Bloomberg, or 74 per cent, said bullion would rise next week. Four forecast lower prices and two were neutral. The metal for delivery in December was up 4.8 per cent this week at $1,090.20 an ounce at noon Thursday in New York.
Gold futures climbed to a record $1,098.50 on November 4 as the Reserve Bank of India said it bought 200 metric tonnes from the International Monetary Fund last month at an average price of $1,045 an ounce. Central banks will become net purchasers of the metal "over time," Aram Shishmanian, the World Gold Council's chief executive officer, said on November 2.
The Indian purchase shows that "we are in the midst of a major change in the global currency arena," said Tom Hartmann, an AltaVest Worldwide Trading LLC analyst in Mission Viejo, California. "The reason gold is faring so well is that there is no consensus as to what will replace the dollar. Uncertainty is what will drive gold higher."
Bullion rose for four weeks before declining last week. The metal has advanced 23 per cent this year as the Dollar Index, which measures the greenback's performance against six major currencies, has lost 6.8 per cent. Gold and the dollar tend to move inversely.
"Investors waiting for that pullback realize that this train-Asian banks buying gold-has arrived at the station and they better get on board now," said Adrian Day, chief executive officer of Adrian Day's Asset Management in Annapolis, Maryland.
Seventeen of 23 traders, investors and analysts surveyed by Bloomberg, or 74 per cent, said bullion would rise next week. Four forecast lower prices and two were neutral. The metal for delivery in December was up 4.8 per cent this week at $1,090.20 an ounce at noon Thursday in New York.
Gold futures climbed to a record $1,098.50 on November 4 as the Reserve Bank of India said it bought 200 metric tonnes from the International Monetary Fund last month at an average price of $1,045 an ounce. Central banks will become net purchasers of the metal "over time," Aram Shishmanian, the World Gold Council's chief executive officer, said on November 2.
The Indian purchase shows that "we are in the midst of a major change in the global currency arena," said Tom Hartmann, an AltaVest Worldwide Trading LLC analyst in Mission Viejo, California. "The reason gold is faring so well is that there is no consensus as to what will replace the dollar. Uncertainty is what will drive gold higher."
Bullion rose for four weeks before declining last week. The metal has advanced 23 per cent this year as the Dollar Index, which measures the greenback's performance against six major currencies, has lost 6.8 per cent. Gold and the dollar tend to move inversely.
"Investors waiting for that pullback realize that this train-Asian banks buying gold-has arrived at the station and they better get on board now," said Adrian Day, chief executive officer of Adrian Day's Asset Management in Annapolis, Maryland.