Commodities | Nov 23 2007
By Chris Shaw
The London Bullion Market Association held its eighth annual precious metals conference in Mumbai and as Barclays Capital reports, sentiment towards gold in particular remains quite bullish.
A survey of participants in the conference showed forecasts for the gold price for September next year remain positive as 39% expect the gold price to average somewhere between US$800-$900 per ounce, while a further 28% estimates the price would be between US$900-$1,000 per ounce.
In contrast only 4% of participants were bearish enough to suggest the gold price would decline to somewhere in the range of US$500-$600 per ounce, while the average price forecast was US$843.70.
Barclays notes investment demand and the weakness in the US dollar were seen as the most significant influences on the metal price, while there was also comment on demand side changes particularly in China and India.
With respect to India the traditional seasonality in demand appears to be reducing as, more and more, all seasons are becoming wedding seasons, while comments also noted a new customer segment emerging given increased demand for gold bars and coins.
Also supportive in the Indian market is the proposal by the State Bank of India to launch its own gold ETF (Exchange Traded Fund), while it was estimated rising disposable incomes should help boost demand by 5-10% annually in coming years.
Presenters at the conference also highlighted a number of key trends emerging in China, the most important including a more liberalised market, a faster growing economy and better product offerings.
Medium-term China is expected to become both the world’s second largest consumer and producer, which would be supportive for global demand.
On the supply side comments at the conference indicated conditions remain challenging, as existing mines are struggling with declining grades, costs of operations are increasing and new discoveries are proving tougher to make and so are declining in number.
This suggests ongoing tightness in the market, which is behind the positive price forecasts of most participants at the conference.
