Dollar may help gold average $435 in '05-economist
Tue Sep 28, 2004 11:53 AM ET
DENVER, Sept 28 (Reuters) - The price of gold is likely to extend its three-year upward trend next year, supported by a weakening U.S. dollar and the possible diversification by dollar-laden Asian central banks into bullion, international economist and gold price forecaster Martin Murenbeeld said.
Even without any gold purchases by the central banks of China, Japan and Korea, Murenbeeld predicted, bullion could average $435 an ounce next year as economic fundamentals in the United States pointed to continued pressure on its currency.
Spot bullion was bid at $412 an ounce Tuesday.
The gold price has climbed steadily since 2001, from a low of about $250 an ounce, alongside a weakening U.S. currency, which makes the dollar-priced precious metal cheaper to buy in other currencies.
"In short, we are bullish on gold because we are bearish on the dollar and the pressure of debt on monetary policy," Murenbeeld told a gold industry conference in Denver, Colorado.
Murenbeeld said he was a dollar "bear" because the United States needs enormous foreign capital inflows for the dollar to remain stable, or to rise, in the face of a yawning current account deficit that is approaching 6 percent of gross domestic product.
"If these foreign capital flows are hard to come by, the dollar cannot rise," he said. "Will the world continue to invest heavily -- $650 billion and rising -- into the U.S. each year, or will it not?"
Murenbeeld ascribed a 55 percent probability to gold averaging $435 in 2005 and a 30 percent chance of a mean price of $470.
"That's pretty aggressive, but some nasty developments may occur on the currency front; and there is also the assumption of some Asian buying in this scenario," he said.
Although he believed Asian central banks had a lot of room to diversify their reserve portfolios into gold -- and should do this because there are so few alternatives to the dollar -- there have been no indications that any are planning to top up their bullion reserves, he said.
Collectively, Asian central banks hold about 1,930 tonnes of gold, equal to just 1.3 percent of their total reserves.
© Reuters 2004. All Rights Reserved.
Tue Sep 28, 2004 11:53 AM ET
DENVER, Sept 28 (Reuters) - The price of gold is likely to extend its three-year upward trend next year, supported by a weakening U.S. dollar and the possible diversification by dollar-laden Asian central banks into bullion, international economist and gold price forecaster Martin Murenbeeld said.
Even without any gold purchases by the central banks of China, Japan and Korea, Murenbeeld predicted, bullion could average $435 an ounce next year as economic fundamentals in the United States pointed to continued pressure on its currency.
Spot bullion was bid at $412 an ounce Tuesday.
The gold price has climbed steadily since 2001, from a low of about $250 an ounce, alongside a weakening U.S. currency, which makes the dollar-priced precious metal cheaper to buy in other currencies.
"In short, we are bullish on gold because we are bearish on the dollar and the pressure of debt on monetary policy," Murenbeeld told a gold industry conference in Denver, Colorado.
Murenbeeld said he was a dollar "bear" because the United States needs enormous foreign capital inflows for the dollar to remain stable, or to rise, in the face of a yawning current account deficit that is approaching 6 percent of gross domestic product.
"If these foreign capital flows are hard to come by, the dollar cannot rise," he said. "Will the world continue to invest heavily -- $650 billion and rising -- into the U.S. each year, or will it not?"
Murenbeeld ascribed a 55 percent probability to gold averaging $435 in 2005 and a 30 percent chance of a mean price of $470.
"That's pretty aggressive, but some nasty developments may occur on the currency front; and there is also the assumption of some Asian buying in this scenario," he said.
Although he believed Asian central banks had a lot of room to diversify their reserve portfolios into gold -- and should do this because there are so few alternatives to the dollar -- there have been no indications that any are planning to top up their bullion reserves, he said.
Collectively, Asian central banks hold about 1,930 tonnes of gold, equal to just 1.3 percent of their total reserves.
© Reuters 2004. All Rights Reserved.
