Average reader prediction for the gold price high point this year is $1129, while the London Bullion Market Association’s experts predict a 2008 high of $1009. There are now 11 months left to see in Mineweb readers can again heavily outperform the LBMA professionals.

Author: Lawrence Williams
Posted: Monday , 28 Jan 2008

LONDON –

Tabulated below are the entries for this year’s Mineweb gold price competition, and for comparison we also show the averages for the panel of professional analysts who contribute to the London Bullion Market Association’s similar competition. Observers will already know that for the similar competitions in 2007, the average predictions by Mineweb readers hugely outperformed those of the experts with the average high and low predicted falling within 1 percent of the actual figures recorded at the respective London fixings. It will be interesting to see whether in this volatile gold market the same pattern will emerge.

As can be seen from the table, this year Mineweb readers are predicting a high of $1129, a low of $795, a year end price of $1046 and an average price for the year of $935. With the gold price already having risen as high as $921 at Friday’s morning fixing, although it has already fallen back since. The Mineweb predictions certainly don’t seem unreasonable at the current time, given that already there are substantial supply reductions in South Africa because of the power crisis and the dollar remaining weak – particularly against the big Eastern economies and Russia.

So what are the pitfalls on the horizon for this level of price not to be achieved in 2008? Jewellery sales in India (the world’s largest consumer in this sector) appear to have fallen and there is also evidence of increased scrap supply because of the higher prices. But historically, once traders and purchasers have come to terms with an increased price scenario, and assuming these price levels are seen as pretty secure, then demand returns.

Central Bank sales? There seems to be a suggestion now that these may be more limited in 2008, and with countries like Russia possibly looking to increase gold reserves, an overall reduction of gold coming into the market from this sector could be a positive factor.

Probably the biggest factor likely to affect the gold price this year is the perception of where the US economy is going. Many observers feel a recession is inevitable and that dollar weakness will continue, forcing up the gold price further. However, should the US avoid falling into recession, and if the country’s trade deficit starts to reverse as US-manufactured goods become more and more competitive on international markets due to the fall in the dollar, then we could see a reversal of fortunes for the gold price.

However, should countries like China, India, Brazil and Russia continue to forge ahead with strong economic growth while that in the US falters, then the dollar will likely continue on its downward path and gold will continue to rise. Pick your scenario and place your bets accordingly!

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=45297&sn=Detail

You have worked hard. Now Its time to work smart. Learn to Diversify Your Income.

This entry was posted on Tuesday, January 29th, 2008 at 1:13 pm and is filed under Archived. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.