My Sources Say No. As I See It, Yes. Probably.

• Print
• E-Mail

A recovery in the U.S. currency from the historic lows it plumbed against the euro earlier this year helped pressure spot gold from a high of $1,030.80 in March to around $775. As gold is often bought as a hedge against dollar weakness, any move in the currency will have a significant effect on bullion prices.

However, analysts are divided over whether the dollar can hold onto its gains, or will weaken once again -- which would provide significant support for gold.

"We think the U.S. dollar has gone a bit too high and we see it falling back again through 2009," said Citi analyst David Thurtell, whose bank in October forecast gold at $950 an ounce next year. A number of supportive fundamental factors remain for bullion, he added. "Mine supply is also quite constrained, even though most mines are still quite profitable," he said. "And investment demand is still quite strong."

We will hopefully be able to bring you some of the views of participants at the 3rd Annual China Gold Summit before the weekend. Stay tuned. Signs point to "Yes."

Jon Nadler

Senior Analyst

Kitco Bullion Dealers Montreal

Direct: 1 (514) 875-4820 ext. 1360

US & Canada Toll Free: 1 (877) 839-8036

Website: www.kitco.com and www.kitco.cn

E-mail: jnadler@kitco.com