BMO, Peter Grandich on gold....Breaking News from The Globe and Mail
BMO boosts gold estimate
ANGELA BARNES
Monday, February 06, 2006
With gold homing in fast on its $600 (U.S.) an ounce target, BMO Nesbitt Burns has boosted its forecast for metal, suggesting that bullion could average $610 this year and $660 next year. Furthermore, Bart Melek, senior economist, thinks that gold will likely reach $700 by the end of next year. Bullion is currently trading at around $574.
Bullion has been rising at a fast clip recently, spurred on in part by geopolitical concerns including Iran's pursuit of nuclear fuel technologies, worry about possible weakening in the U.S. dollar, renewed interest in commodities in general and gold in particular as an asset class along with speculative interest. Last Thursday, the price broke through $575, a quarter-century high.
But Peter Grandich, New Jersey-based editor of the Grandich Letter, warns that bullion prices may weaken in the near term. Mr. Grandich said in a recent newsletter that when he turned bullish on gold in May, 2003, most investors were doubters and unwilling to believe his “$500 gold was a question of when, not if” mantra. That has changed. “The boat of gold bulls has gone from being a lonely place to quite crowded,” he said.
“Technically, gold is very overbought,” Mr. Grandich said. He noted that secular bull markets can stay overbought for long periods but there is the added consideration now that gold is entering its weakest seasonal period, which is February and March. “While I do believe we can challenge and surpass the all-time high above $850 before it's all said and done, I do believe it's time to put the yellow flag in my pocket for a possible near-term waving,” Mr. Grandich said.