Analysts: gold prices to keep rising

Metals analysts predict gold prices could continue to rise in 2004 to as high as US$430/oz provided that the US dollar continues to trade weakly against other important foreign currencies, Mexican daily Reforma reported. "As the US dollar is expected to trade at US$1.35 per euro by the end of 2004, it is expected that gold prices could reach levels of US$430/oz," Victor Flores, an analyst with London-based HSBC bank, told Reforma. According to Flores, the dollar will continue to depreciate against the euro, the yen and the British pound, which will help gold prices. Gold has risen 18% this year to reach 7-year highs while the dollar has plunged 18% against the euro and 10% against the yen. On Thursday another surge saw the spot price top at US$413/oz before easing back to US$410/oz, and it "seems likely to hold its recent trading range as the holiday season approaches," Barclays Capital said in a report Friday morning. Frederic Lasserre, analyst with Societe Generale, said investors were not focusing on the strength of the gold market and that prices were merely a reflection of expectations for the dollar. Lasserre predicted the dollar could hit its lowest point in the second quarter of 2004, falling as low as US$1.30 per euro. According to a report by Gold Fields Mineral Service (GFMS), demand for gold from the jewellery sector increased 6.6% to 637t in the 3Q03 compared to the same period 2002.