Gold price path could be volatile in 2012
While many pundits are predicting gold prices could rise above US$2,000 an ounce this year, it is just as likely that price movements could be sideways and choppy, than onwards and upwards, says Tom Kendall, head of precious metals research at Credit Suisse Securities.
Speaking at the mining indaba, Kendall said the good news is that the global economy is improving and moving in right direction.
“Global industrial production is lagging global demand. Global demand for goods and services is improving and that gap has to close. That should be good news for those in the commodities business,” he said.
The bad news is that investment is still quite low and this is negative for financial markets in general and commodity markets in particular.
Kendall believes that volatility will continue. This volatility will come in many guises – from commodity price volatility and equity price volatility – and this is the “new normal” that we have to learn to live with.
He notes that while volatility does seem to be in decline, aided by the recent change of direction by the ECB in its lending to financial institutions, it does not pay to get complacent about the lesser volatility.
He added that volatility in the credit markets is important for anyone trying to raise capital for projects – and this will have an effect on mining industry.
He also noted that there are a number of political events in various countries this year, which means 2012 could be a vintage year for volatility. “We are in a year where political actions, speeches and words mean that volatility is going to be high.”
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