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Gold approaches $1,000/oz breakthrough

Ines Schumacher | Tue, 02 Jun 2009 09:05
[miningmx.com] -- UK-based precious metals consultancy firm GFMS said the gold price will soon break through the $1,000 per ounce level on the back of inflation concerns and the weakening dollar. “The gold price has risen quite substantially over a relatively short period of time. Investment should carry gold through $1,000/oz soon,” GFMS research director Philip Newman told Miningmx. He said the price strength owes much to the weakness in the US dollar, as well as rising inflationary concerns linked to large stimulus packages. “These factors are encouraging investors to get back into gold,” Newman said. Gold reached a high of $988.52/oz on Monday and at the close of the JSE it was trading at $978.51. Gold last reached similar highs in February. “We will have to see how far investors can take prices from here,” Newman said. The global gold market is small compared to traditional investor vehicles such as NASDAQ, he said. “Small movements have a more than proportionate impact on the gold price.” GFMS maintains that the gold price will break through $1,100/oz this year. Newman said GFMS is expecting a sharp increase in gold scrap as one of the results of the high gold price. “At the beginning of the year we saw that scrap supply was more than jewellery demand,” he said. The high gold price would mean less demand for the metal in the jewellery sector.as that jewellery demand would take a hit.