Gold prices, trading at record highs, are likely to trend higher, to between US$1,300 and US$1,500 per ounce in the second half of this year, Bank of Taiwan (BOT, 臺灣銀行) analysts said yesterday.
“Worries over the credit crisis in Europe have given gold prices a boost, as many see it as a tool for hedging risks,” Chang Wu-ren (張武仁), general manager of the bank’s department of precious metals, said on the sidelines of the bank’s launch of US dollar-denominated gold passbooks yesterday.
The bank has 300,000 account holders of New Taiwan dollar-denominated gold passbooks, bank president Chang Ming-daw (張明道) told a media briefing.
PHOTO: AFP
Its newly launched US dollar-denominated accounts will provide an alternative for gold investors to hedge currency fluctuations, Chang said.
If the European crisis worsens and drags the global economy into a second dip, some specialists at the London-based GFMS Ltd have even predicted that gold prices could skyrocket to US$2,000 per ounce, Chang said.
Nervous high net worth European buyers, who sold their euro assets for gold, were the main driver behind the surge in gold prices last month, he said.
In the short term, however, gold prices could see a correction, as the recent rally was mostly liquidity driven, he said.
Bloomberg reported yesterday that gold for immediate delivery lost US$1.30, or 0.1 percent, to US$1,235.25 an ounce at 10:29am London time, down from its record close of US$1,252.11 on Tuesday.
However, the metal’s downside risk may be limited amid speculation that the several emerging countries’ central banks were secretly pushing up their gold reserves to hedge against inflation and asset bubbles, which has been keeping the gold price firm, Chang added.
Risk-averse investors are thus advised to add gold to their investment portfolios — 10 to 20 percent of which could be put in gold, Chang Terry Yang (楊天立), deputy manager of BOT’s precious metals department.
He also advised investors to average down their costs to benefit from the metal’s long-term rally.
A double-digit return is almost assured since gold prices are forecast to average at around US$1,200 per ounce this year, up from last year’s US$982 and US$690 in 2008, Yang said.
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