ALTHOUGH gold experienced a blip in October 1999, it was another disappointing year for the precious metal which has been losing out to investments in hydrocarbons and some base metals.
However, in spite of the sabre rattling from the European Central Bank, most analysts remain bullish on gold for the year ahead.
The fillip to the gold sector came in September with an announcement about likely future sales and lending activities of the world’s largest sector gold holders, which provided some level of certainty to the market.
Stockbroker Macquarie Equities Limited analyst Kamal Naqvi believes that less speculative short selling and more strategic producer hedging, with a backdrop of robust demand, will justify price rises from US$250 per ounce and trading in a higher range.
“While the added certainty should be positive, we are not convinced that there is sufficient fundamental basis for a sustained bull market for gold,” he said.
However, he did believe the physical fundamentals for gold are improving.
“We expect the paper market to provide some support to gold, but only after two to three years,” Mr Naqvi said.
Stockbroker Bell Securities Limited analyst Keith Goode said, in theory, gold should improve in January 2000, ahead of the Chinese New Year of the Dragon, although the behaviour of the next gold auction on 25 January 2000 “may have a greater influence”.
