Gold-focused exchange traded funds (ETFs) will gleam from the idea that the precious metal will likely peak at just more than $1,000 per ounce in 2008, according to a London-based consultancy firm.
Gold is likely to continue to benefit from a weakening U.S. economy as investors continue to seek out safe havens for their money, writes James Macharia for Reuters.
If the United States can manage a turnaround in middle-term, then the price could begin to decline about 3 years from now, according to consultancy firm GFMS CEO Paul Walker.
Meanwhile, the South African government asked mining firms on Tuesday to cut their consumption to ease the power crisis, Macharia for Reuters says. Could this also have an impact on the price of gold?
Shortages since January halted mines in the country, a major gold producer and the world’s top platinum producer. Mining companies are now operating on 90% of their normal power, which threatens output and profits.
The iShares MSCI South Africa Index (EZA) has dropped sharply since the crisis began. Even though mines are back in business, the economy may have already seen some damage.
ETFs that are likely to feel the ups and downs of gold’s path this year:
- streetTracks Gold Shares (GLD), up 6.3% year-to-date
- iShares COMEX Gold Trust (IAU), up 6.5% year-to-date
- Market Vectors Gold Miners (GDX), up 2% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.