Thursday, 3rd August 2006 (4442 views)

According to one Japanese broker, the price of gold could go above $700 an ounce before the year is out.

Toshimitsu Kawanabe, of broker Taiheiyo Bussan, told Bloomberg that provided the price of the precious metal does not drop below $600 an ounce over the course of this month, several factors could see it rising to similar levels seen in spring this year.

Potential political confrontations between the West and Iran over Tehran's nuclear development programme and continued trouble in the Middle East between Israel and Hezbollah could see rising levels of security investment in gold.

If oil exports are suspended by Iran, which would be the country's trump card if diplomatic tensions escalate further, then oil prices could potentially sky-rocket – Iran is the world's fourth largest oil producer, behind the Saudi Arabia, Russia and the US.

With added risks of American inflation continually in the headlines as well, gold may be seen as the logical choice for hedging investments, meaning the precious metal could be set to make substantial gains, Mr Kawanabe claimed.

 

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