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Market’s golden daze

CONTINUING uncertainty in world equity markets has put the focus squarely back on gold. And views about the precious metal’s prospects are wide and varied.

State One analyst Kamlesh Chand believes the gold price has hit resistance around the $US325-$330 level $A$600-$610) and may have topped. Meanwhile, US gold watcher Erik Gebhard had this to say last week: “Gold has been a bit frustrating the last couple of weeks. Iraq continues to yank our chain, delaying inspections then allowing them, saying there are no conditions, but then saying there are,” he said.

“All the while, stocks and the dollar are as volatile as ever, pulling gold back and forth.

“If current circumstances [war on terrorism, Middle East tensions, stocks at five-year lows] haven’t yet been enough to attract more buying interest in gold, what will?”

Mr Gebhard believes a change in investor sentiment would be required before any run on gold would occur.

“Until investors shake the notion that gold is an antiquated form of investment, or only for paranoid-doomsday anarchists and boring old men in coin shops, it won’t shine as bright as some would like,” he said.

“The correlation between gold and equities is almost 100 per cent inverse. If you’re really confident about your trading abilities you’d want to be long gold and short stocks, or vice versa.”

On the trading floor, Mr Chand believes Lihir Gold could slip back to a new support level of $1.20. Likewise, Auiron Gold is moving down to $3 while Newcrest may reach the mid $5 price range.

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