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Gold price could bounce - Hilton Ashton, analyst, Absa Capital
In an interview on ClassicFM @ 18:20 on 24 July 2006
[miningmx.com] -- THE fall in the gold price to just above $600/oz from a recent spike of $676 is an overreaction and should rise again, said Hilton Ashton from Absa Capital.
Gold fell to below the 100-day moving average of $614, which trigged stop-loss measures. Historically, it has been clear that big moves in the gold price tended to be a result of an overreaction, he said on the Classic Business Day radio show.
"I believe we’re now seeing an overreaction on the downside. My personal feeling is we’re actually going to see the price probably bouncing up again when the overall picture gets resolved, and the speculators believe that we’ve seen an overreaction on the downside. So there’s a trading limit around here," Ashton said.
Gold shot to $676 on concerns about the Israeli attacks on Lebanon sparking a regional conflict, but the fighting appears to have been contained
within a relatively small zone, calming market fears.
"It’s more speculative trading that we’ve seen, and I think they have been watching the Middle Eastern situation - and they’ve come to the conclusion that this conflict is probably going to be contained just between those two. With the US sending Condoleezza Rice into the region they’re expecting a resolution probably sooner rather than later," he said.
The oil price has not reacted with as much volatility as the gold price has, he said.
"If you look at the relation between the two commodities over the last year it’s been a very close tracking of the two. So unless some big fundamental change has happened we should either see the oil price dropping, or the gold price going back up to levels where it has been in the past," he said.
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