GFMS sees gold prices rising above $1,300/oz in H2 2010


GFMS sees gold prices rising above $1,300/oz in H2 2010

LONDON, July 8, 2010 – Global precious metals consultancy GFMS Ltd. expects gold prices to rise above the $1,300 an ounce mark in the second half of 2010 because of a rise in investment demand for the precious metal.
“This process would be aided by physical markets, to some extent at least, adjusting to higher price levels, as indicated by the rebound in fabrication demand and the drop in global scrap supply in the first half, in spite of considerably higher average dollar gold prices,” GFMS said in a statement.

Fabrication demand, which is dominated by jewellery, is forecast to recover some of the ground lost in 2009, although year-on-year growth is expected to slow in the second half of 2010 due to higher gold prices.

But GFMS cautioned that there was still scope for downside over the next few months if investment demand temporarily faltered, although in the absence of a major change in the economic outlook, it was felt that gold would now be well supported at prices between $1,150 and $1,200.

“Even though progress is dependent on yet higher inflows from investors, economic conditions still seem to favour such growth in investment over the balance of this year and, indeed, they probably will continue to do so well into 2011,” Philip Klapwijk, GFMS’ chairman, said in a statement.

“Nevertheless … especially with inflation low in all the major economies and given the tough fiscal measures now being introduced in many countries, any serious tightening of monetary policy in the United States and Europe would quickly transform the outlook for investment and the gold price, even if that possibility currently appears rather remote.”