Wednesday, 4th January 2006 (4800 views)

Hedge funds are betting on a solid rise in the price of gold in 2006 as traders look to decrease reliance on bonds, stocks and currencies, Bloomberg reports.

In an indication of the confidence the market holds in the yellow metal, large speculators have increased bets the precious metal will rise by three-fold in five months.

In July, hedge fund managers held 49,022 contracts in gold futures. By December, this figure had boomed to 154,522.

A Bloomberg poll reveals that industry insiders believe the precious metal will continue to soar in 2006, following record gains last year.

The consensus is that the price of gold bullion will average $525 an ounce in 2006, up from $445 an ounce last year.

That would represent a sixth year of gains, the longest purple patch since 1968, when the price of gold was first allowed to be dictated by the free market.

The current consensus, however, falls well short of predictions made by many in the industry late last year when the price of gold smashed the symbolic $500 an ounce for the first time since 1987.

Many onlookers insisted that the value of gold would soon rocket to $600 an ounce, with the most bullish spectators even pinpointing $1,000 an ounce as a possible target.

Gold hit $533 an ounce in Singapore today.

Bloomberg's poll was based on the views of 29 traders, analysts and investors.

 

« Back to the stories

 

The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.