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Commodity futures

Gold Prices Nearing $450 Per Ounce, Fueling Speculative Buying

Strategic Insights

— 2 min read

Gold futures on the Comex division of the New York Mercantile Exchange were trading within $1 of the elusive $450-per-ounce level, driven by continued weakness in the U.S. dollar and strengthened oil prices. This development has sustained fund interest in gold, leading to increased speculative buying. The precious metal is closing in on key longer-term chart resistance at $450.00, as evidenced by spot gold's fresh 16-year high last week. Australian gold output has also recovered modestly in the third quarter after a "difficult period" in the first half of 2004, according to Melbourne-based consultancy Surbiton Associates.

Key Takeaways:

  • Gold futures on the Comex division of the New York Mercantile Exchange were trading within $1 of the elusive $450-per-ounce level, driven by continued weakness in the U.S. dollar and strengthened oil prices.
  • Spot gold last week scored a fresh 16-year high, indicating a significant increase in demand for the precious metal.
  • Australian gold output has recovered modestly in the third quarter after a "difficult period" in the first half of 2004, according to Melbourne-based consultancy Surbiton Associates.
  • The London Bullion Market Association reported higher gold and silver clearing statistics in October, with gold showing the larger rate of increase.
  • Exchange-traded funds (ETFs) are attracting investors looking to play the gold cycle, with the perception of rising inflation and a weak U.S. dollar supporting gold demand.
  • Johnson Matthey PLC is maintaining its 2004 platinum projection despite a blast at South African platinum producer Lonmin PLC.
  • Carl Birkelbach, a Chicago-based money manager, predicts that gold prices could potentially reach $500 per ounce within the next year due to inflation and a weak U.S. dollar.

Statistics:

  • Gold futures on the Comex division of the New York Mercantile Exchange were trading at $448.50 per ounce, within $1 of the elusive $450-per-ounce level.
  • Spot gold scored a fresh 16-year high last week.
  • Australian gold output recovered modestly in the third quarter.
  • The London Bullion Market Association reported a 40% increase in gold clearing statistics in October.
  • Johnson Matthey PLC is projecting a market deficit of 40,000 ounces in the platinum market.
  • Carl Birkelbach's Chicago-based money management firm predicts that gold prices could reach $500 per ounce within the next year.

Sources:

  • "Nov 22, 2004 (ODJ via COMTEX) TOP STORIES: NY Precious Metals Review: Gold Creaking Toward $450"
  • "Australian Gold Output Firms After Lackluster 1H 2004" by Surbiton Associates
  • "LBMA: Oct Gold, Silver Clearing Statistics Higher On Mo" by the London Bullion Market Association
  • "WSJE Breakingviews: Exchange-Traded Gold Fever Up" by the Wall Street Journal
  • "Inflation, Weak Dlr Could Lift Gold To $500 - Money Mgr" by Dow Jones Newswires
  • "European Precious Metals: SPot Gold Up; Speculative Buy" by Dow Jones Newswires
  • "Nov 22, 2004 (ODJ via COMTEX) TOP STORIES: NY Precious Metals Review: Gold Creaking Toward $450" (multiple sources)

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