S&P: Bullion likely to be sustained - Thursday 19th July 2007

The latest Standard & Poor's Industry Report Card on European metals and mining indicates that gold prices are likely to be sustained in the medium to long term.

It indicates that production of the yellow metal is decreasing and that "few new [mining] projects exist that could reverse this expected production decline".

However, the report card added that, when fund investment was taken into account, "gold will be true to its form by remaining extremely volatile and unpredictable".

In general it is looking bullish for bullion, with some analysts predicting that the price of gold will reach record levels next year.

"Investors are likely to push up the price to $850 an ounce in 2008," Philip Klapwijk of UK consultancy GFMS told London's Financial Times.

As the dollar loses ground against the euro and yen, an increasing number of investors opt for gold, pushing up the price.

Michael Lewis of Deutsche Bank AG told Bloomberg: "The risks are that the dollar will overshoot to the downside, and that's positive for gold."
Goldbug, 19 Jul '07

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