Gold strong on funds and fundamentalsAnalysts see gold strong on funds and fundamentals
Gold prices are likely to remain strong in the near term as the metal is getting tremendous support from investment funds and fundamental factors such as slow growth in mine output, analysts said.
"We have got a very positive scenario in the short term. From a trading point of view, there is still room for further strengths in prices," said Alan Williamson, head of commodity research at HSBC Bank.
"At the moment, gold is clearly very much in flavor. Gold is now rallying in all currencies," he told a gold investment summit organized by Euromoney Seminars.
Spot gold prices have risen nearly 20 percent this year on heavy buying by funds who have been diversifying their portfolios into commodities for better returns and on fears of inflation and economic growth. The price hit a 24-1/2-year high...on Thursday. "Gold still has some upside potential," said Paul Walker, chief executive officer of GFMS Limited, a precious metals research consultancy.
He said gold prices were expected to continue to rise in 2006 and it was not impossible to see gold spiking to $850 an ounce in 12 to 18 months.
Industry experts said mining costs had risen significantly over the past years because of more costly fuel, power, freight and labor.
They also said that gold's bull run was continuing despite a rise in the dollar but the metal could gather more strength if the U.S. dollar weakened against major currencies.