Friday, 14th January 2005 (2723 views)

UK-based consultancy GFMS has forecast a revival in precious metal and gold interest in 2005.

The firm said it expects interests to average $447 a troy ounce in the first half of the year.

However, GFMS stopped short of predicting that interest would reach the record high of 1988, when prices hit $483.90/oz.

GFMS estimates that, last year, global gold mine production dropped by just over 110 tons - the biggest annual decline in gold production since the 1940s.

But GFMS said it expects investment demand to drive the renewed interest in gold, with attention within this category shifting to the longer term, more fundamentally driven players.

"Their rationale for interest in gold was ascribed to such economic factors as ongoing dollar weakness, the US fiscal and current account deficits and low real interest rates," the GFMS report said.

GFMS analyst, Bruce Always, stated: "We only need a small shift in the allocation of institutional funds to bring about a quite hefty rally in the price."

GFMS said it also anticipates that dips below $420/oz will be limited during the first six months of the year.

 

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