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We’re comfortable with the gold price - Jessica Cross, Virtual Metals

In an interview on ClassicFM @ 18:15 on Tuesday, 13 September 2005

[miningmx.com] -- THE gold price could touch $470/oz this year according to UK metals consultancy, Virtual Metals. Strong jewellery sales into the Middle East, a reduction in hedging, and no additional central bank gold sales had injected fresh optimism into the gold market.

“I’m known as a gold bear, but we’re comfortable with the gold price and think it could go higher,” said Jessica Cross, MD of Virtual Metals. “The supply/demand fundamentals [of the gold market] are coming through. And there’s been strong jewellery demand in the Middle East on the back of a large amount of petro-dollars,” Cross said.

At the time of writing, the gold price was trading at about $446/oz. There was also evidence of a delink with the dollar which also strengthened.

Matthew Turner, a commodity analyst at Virtual Metals, said the dollar and the gold price had not necessarily decoupled. The weakening of the dollar normally precipitated an improvement in the gold price.

The gold market could be curbed by the resumption of central bank sales. However, a gold price target of $470/oz remained the group’s forecast high, he said.
It’s worrying South African production is heading for below 300t
The position of traders on Comex remained long despite a recent sell-off of gold and this had provided investors with some optimism, Turner said.

Commenting on the decline in supply from South Africa, Cross said that it remained a challenge to the country. The decline in South African gold production to, possibly, less than 300 tons would have a psychological impact on the world’s gold traders.

“However, there is supply from other parts of the world with Africa coming into its own,” Cross said. “The supply side is still robust despite lower South African output,” she said. “It’s worrying for South Africa that production is heading for below 300 tons”.

Recent World Bank figures showing strong jewellery demand was also “supportive” to the gold market, Cross said.