More upbeat news on gold (naturally) and some confidence about iron ore demand and therefore pricing (a bit of a surprise).
Gold has now hit its 11th record high in the past month as prices remain above $US1,300 an ounce, which to some traders, is encouraging as it means a bottom is being constructed.
It finished at $US1,309.20 an ounce Friday morning in New York. It hit an intraday high of US$1,317.50 an ounce.
And the annual meeting of the London Gold Bullion Market Association was held this week (In Berlin, Montreal next year, times must be good) and it heard all sorts of confident outlooks.
A poll of people attending the meeting said the gold price would rise to $US1,450 an ounce in the next year.
That’s a rise of just over 12% from current levels, or well under half the 32% rise in the past year, and around 20% so far in calendar 2010.
$US1300 an ounce was forecast for the end of 2010 or early 2011, but it has come and been passed.
But just remember if gold hits $US1,450 an ounce, then the value of the Aussie dollar will be at $US1 parity or more.
It’s really a punt on the value of the US dollar continuing to fall. $US1,450 an ounce implies a dollar at well over 1.45 to the euro from around 1.36 now.
Spot gold hit a record $US1,313.20 Wednesday night in offshore trading.
"Low interest rates equal rising gold prices", said James DiGeorgia, publisher of the Gold and Energy Advisor, quoted by the Kitco metals website from the Association meeting.
He expects gold to rise steadily over coming years to what he calls the "equilibrium price" of around $2,300 – which happens to be in line with gold’s all-time record on an inflation-adjusted basis.
And one gold foe seems to have switched tack.
We have mentioned comments in July from Julian Jessop of Capital Economics in London who forecast a fall in the gold price to below $US1,000 an ounce by the end of 2010 because weakening global growth picture would sap demand for gold as a hedge against inflation.
But the push towards a second round of spending by the US Fed, the heavy spending by the Bank of Japan, and continuing talk of a similar move from the Bank of England, now sees Mr Jessop saying that "additional QE (Quantitative Easing) is more likely than an early exit, it is hard to see anything on the horizon to change the positive sentiment towards gold".
Jessop now expects the price to "stay high for several more years".
But a word of warning about the forecasting record of those that the LBMA, they undershot with last year’s forecast.
Several reports pointed out that last year they forecast gold would be trading at $US1,182.50 at the start of this year’s conference.
It wasn’t, it was around $US1,300 an ounce.
In their defence no one picked or could have picked up on the way the euro crisis erupted earlier this year (although it was burbling along) or on the slump in the US economy, especially housing, after the rebound in late 2009.
No one was talking about a double dip recession in the US, or more QE (QE2, and not the ocean liner).
Barrick, the world’s biggest gold miners sees the world price above $US1,500 an ounce in 2011, while AngloGold Ashanti, the world’s third-largest gold miner said this week it was looking for annual rises of $US70 -$US100 an ounce in the gold price "over the next five years".
Barrick Gold said gold prices could "easily" outperform recent record highs to rise above $US1,500 an ounce in the next year.
Reuters quoted Jamie Sokalsky, the company’s chief financial officer as saying, "My view is that we could see much stronger prices still from here…I can see gold easily taking out new highs and going above $1,500 an ounce in the next year."
AngloGold CEO Mark Cutifani said at the LBMA that gold price rises were outpacing increases in average global production costs thanks to higher investment interest in both gold equities and direct investment in bullion via exchange-traded funds.
Most of the delegates at the LBMA conference cited the potential of a double-dip recession and further weakness of the US dollar as the main drivers of gold prices during the next year.
Some also cited fears about surging inflation on the back of further monetary easing by the US Fed.
The LBMA delegates said silver would be trading at $US24 an ounce in 12 months’ time, up from the current 30-year high of more than $US21 an ounce.
Platinum prices would be at $US1,857 an ounce, up from the current level of just over $US1,600 an ounce and palladium at $702 an ounce, up from around $550.
And here’s an intriguing question, could the gold price catch platinum’s price over the next five years?
After months of rising gloom about falling demand and prices for iron ore from China, the world’s biggest buyer, there’s been a noticeable outbreak of confidence this from exporters (naturally) and some Chinese buyers (a bit of a surprise).
The China Iron and Steel Association heard this week that forecasts that demand for iron ore will revive by early next year, according to Jose Carlos Martins, executive director of ferrous metals at the world’s top iron ore miner Vale.
Reuters and Bloomberg quoted him as saying:
"I see demand slowing for two or three months, then growing again.
"We need to prepare for growth again by the end of 2010 or in early 2011."
Over the last decade,
