Gold hits record, rise expected to continue

The gold price reached a record yesterday and could gain further as uncertainties over the world economy, a weaker US dollar and growing concern over inflation spur demand for the metal.

The price of gold for immediate delivery climbed to US$1,488.68 an ounce and gold for June delivery in New York touched an all-time high of $1,489.70 an ounce. The local gold market moved in the same direction, hitting a new high of Bt21,150 per baht weight.

Global economic volatility, the weakening of the dollar and inflation appear to be the main drivers of the price, said MTS Gold Group.

Consumer prices in China rose 5.4 per cent in March, the quickest pace since 2008, exceeding the government's 2011 target for a third month. India's wholesale price index in March accelerated 8.98 per cent from a year earlier after an 8.31-per-cent gain in February. Inflation in the 17-nation euro zone rose to 2.7 per cent, exceeding the target of 2.00 per cent.

This week, the metal could continue its gains to $1,500 an ounce or Bt21,350 per baht weight on rising inflation worldwide, uncertainties over the world economy, resurfacing debt concerns in the euro zone, and continued unrest in the Middle East, said YLG Bullion & Futures Co chief executive officer Tipa Nawawattanasub.

The year-end target for gold remained at $1,600-$1,630 an ounce or Bt22,500-Bt23,000 per baht weight, she said.

Goldman Sachs Group analyst Jeffrey Currie was quoted by Bloomberg as saying in a report yesterday: "We now recommend an underweight allocation to commodities on a three-to-six-month horizon. We maintain that commodity returns still have upside on a 12-month horizon."

Gold probably will keep rising towards the bank's six-month target of $1,565, the report said. Persistent low US interest rates will support prices over the coming year, and rising inflation creates upside risk for bullion prices, Goldman Sachs said.

YLG recommended that gold holders continue holding the metal and take profit when the price reaches $1,500 or $1,530 an ounce. They could buy gold at $1,450 an ounce or Bt20,660 per baht weight and $1,430 an ounce or Bt20,370 per baht weight.

MTS Gold suggested periodic profit-takings with caution on price.

(Source: http://www.nationmultimedia.com/home/Gold-hits-record-rise-expected-to-continue-30153361.html)