CPM sees further strength, rise in gold prices - Nov. 30.07
posted on
Nov 29, 2007 01:11PM
GENEVA (Reuters) - The price of gold will remain high and has scope to rise further because of strong demand from investors seeking a safe haven, CPM Group Managing Director Jeffrey Christian said on Thursday.
Investors are continuing to load up gold because of political and economic fears, and this is outweighing central bank sales and likely increases in production, he told an Academy and Finance conference on investing in gold.
"If you want to know why the prices of gold and silver are high, it's because investors have been buying historically large amounts of gold especially and silver to a lesser extent, and it's that investment demand that's driven the price up," Christian said.
Christian said the average annual price of gold this year would be close to $700 an ounce. That compares with an average $612 in 1980 when gold hit a record intra-day peak of $850.
"We think gold prices will keep rising as long as investors keep buying and our view is that the gold price probably will hover around $800 for a the next couple of years," he said.
The price has been rising in euro and rupee terms as well as dollar terms, so gold strength is not a function of dollar weakness, he said.
Gold is now in the seventh year of a bull market, defined as a year when purchases exceed 20 million ounces net of physical gold.
"They've been buying gold because they're afraid. They're afraid of political issues, financial issues and economic issues," Christian said.
India was the main source of demand for gold in 2006 and 2007, but many purchases there were for Middle Eastern buyers. Iran was the second biggest, he said. Continued...