We read that in a recent report Goldman Sachs predicted that gold will average $785/oz through 2007 and maybe they are right. We would not be bold enough to say that, but we would be bold enough to say that our next target for gold, still remains $1,000/oz. It is possible for that figure to be hit some time next year, which would probably have to happen for the Goldman Sachs average price prediction to prove correct. In spite of the volatility, the chart for gold bullion remains bullish. We suspect that the recent weakness is because of a short-term correlation that exists with oil and that oil weakness is impacting upon the gold bullion price.
The end of September was the last date that Central Banks had to sell gold under the five-year pact in which they have agreed to limit total sales to 500 tonnes per annum. This was the second year of the second such five-year pact. It is generally reported that the amount of gold sold was somewhere between 400 tonnes and 420 tonnes. Now September is over, the unused amount cannot be carried forward.
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By John Robson & Andrew Selsby at RH Asset Management Limited, as published in the Onassis Newsletter, a fortnightly newsletter that gives insight into the investment markets.
For more from RHAM, visit https://www.rhasset.co.uk/
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