Gold price looking strong: NAB
Kate Hayc/ck - Mining News
Wednesday, 31 October 2007
NATIONAL Australian Bank says the rampaging gold price, which reached highs of $US790 an ounce this week driven higher by the weaker US dollar, looks set to rise again next year.
NAB said it predicted the gold price would rise around 8% in 2008, and average at $740/oz, again linked to US dollar weakness and anticipated interest rate cuts in the United States.
In the first half of this year, the gold price averaged around $666/oz, a year-on-year increase of 11%, but has increased rapidly since September to average around $712/oz.
So far, the gold market had shown a "relative lack of volatility", the bank said, which has been a positive factor for gold demand in 2007.
Gold fabrication also continued to drive gold demand, with high growth in the demand for jewellery worldwide.
The strongest growth market for gold fabrication was India in the first half of the year, with Indian consumption rising 72% and accounting for 36% of the total demand for gold. China's gold consumption has also risen by 31%.
Meanwhile, gold investment slowed in recent quarters; however NAB said incentives to invest in the precious metal would increase as returns from interest assets fall.
The bank also said gold mine production was still struggling to keep up with demand and was forecast to rise only modestly in 2008, with output falling dramatically from South Africa in particular.
Australian gold production for the first half of 2007 was unchanged at 126 tonnes, the bank added, but the development of Boddington in Western Australia should add gold to the stream by late 2008.
The spot gold price slumped overnight to $782.41/oz, down 7.6% from the previous high of $790/oz.
nab on gold prediction
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